Minister Eoghan Murphy's address to the Dáil on Budget 2018

Published on Wednesday, 11 Oct 2017
Minister Eoghan Murphy

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Introduction
Ceann Comhairle,

I very much welcome this budget – I hope people can recognise all the good it will do:

  •  in helping people out of homelessness and in to new social housing homes,
  • supporting people in to rented accommodation,
  • and removing significant obstacles to getting more homes built, more quickly, and at affordable prices.

Any new home built – be it private or social – any new home on the market from vacancy – any new site developed – relieves pressure in other parts of the system.

Our constant focus has to be on supply.

In total, my Department’s Vote for 2018 will be €2.394 billion. Within that, housing is by far and away the biggest programme.

All told, €1.9 billion will be available for housing next year, an increase of €600m, or 46%.

This investment is directly aimed at addressing our housing shortage and homelessness crisis.  It represents an increase of 62% on the capital side – to build new homes - and 35% on the current side to over €760m – to support homelessness, as well as supporting people into new social housing tenancies.

Looking beyond 2018, I have secured an extra €500 million for capital investment in social housing in the years 2019 to 2021, which will allow us to increase the Rebuilding Ireland social housing target from 47,000 to 50,000 homes, the figure recommended last year by the Special Oireachtas Committee on Housing.

That is new money that wasn’t in Rebuilding Ireland to date and which will deliver more social housing homes.

And because of the changes I announced at the Housing Summit, the stock of homes that will actually be built directly by LAs and AHBs will also increase.

The Build Programme
We will almost double our social housing output next year in terms of direct build, moving from 2,000 this year to 3,800 next year. In 2015 this number was less than 500.

The budget for Local Authorities will increase by over 100% to enable them to meet their targets.

If you add in Part V,s, vacancy conversions, acquisitions, and long-term leases – 7,900 new homes with all the security and affordability that social housing brings, will be created.

Will this alone solve our waiting list problem or meet all of the needs of our people? No it will not.

That’s why those figures will increase again the next year, and the year after that, and the year after that.

We will get to 10,000 new Social housing homes in to the Housing stock: we can’t do it next year – but we should be there by 2020. Which is something again when you look back to our numbers as recently as 2015.

The work and investment that the government is putting in to social housing is working and the last two years are proof of that.

And with the new capital investment thanks to a growing economy, we can now do more.

Until we have those houses built, we will continue to support people in to rented accommodation through the HAP payments. This budget effectively doubles to over 300m and will support 17,000 new tenancies next year.

Taken together with our build, leasing and acquisition targets – every working day of the week next year – 98 new households will be supported through social housing supports.

This wouldn’t be possible were it not for the priority that the government places on housing our citizens who need our help the most.

Homelessness
And it is homes that our homeless people and families need. One home for one family.

But until we have those homes built, we will increase our expenditure to 116m next year for homeless supports, and we will continue to roll out our hub programme – and we will move more and more families out of hotels & BnBs in to more suitable and ultimately more secure and sustainable accommodation.

Removing obstacles to affordable supply
Just as significantly as this increased investment and these new builds for next year,

Budget 2018 removes the remaining significant obstacles to building more homes, more quickly, and at more affordable prices.

  • By investing more in direct house-building by the state as I outlined,
  • By removing the Capital Gains Tax incentive to hold on to residential land,
  • By escalating penalties for land hoarding,
  • By introducing new affordability measures,
  • And, by providing a new, more affordable finance vehicle for builders up and down the country.

Affordability
As we build more homes, we must ensure that new supply is delivered at more affordable prices.   We know that progress is being made when it comes to building more homes, but there’s a generation of people who are being locked out of the housing market.

Some affordability measures are already underway and working well:

  • ABP fastrack, shoterns time, removes cost
  • The rent caps introduced at the beginning of this year are working. If trends in Dublin continue for example, then rent increases this year will be below 4%. That’s a big drop on the more than 8% increases last year.
  • Where necessary, new areas will enter the rent pressure zones.
  • Earlier this week I gave the go-ahead for 18 of the 34 contracts to be completed under the LIHAF infrastructure fund.  This Fund will open up land banks to potentially support 20,000 new homes and on 70% of the sites involved, there will be homes coming in at prices below €320k.
  • Other sites will have specific affordability carve-outs.
  • And last week I announced a move to new planning guidelines to allow for more affordable apartment development for our city centres, like the removal of the car parking space requirement, a significant cost to development.

But we can do more, and we must.

  • Home Building Finance Ireland, the new entity announced by the Minister for Finance earlier today will provide finance at commercially competitive rates to developers with sites ready to go but who are experiencing difficulty in obtaining funding.
  • A second LIHAF infrastructure fund of €50m will unlock even more sites, more quickly, and at affordable prices.  As you know, LIHAF 1 was well over-subscribed, so we expect a second LIHAF call to be answered quickly.
  • Furthermore, a new fund of €25m will be provided (over 2018 and 2019) to unlock Local Authority owned land specifically to deliver affordable housing on those sites using models like co-operative housing which have already proven to be successful but are now needed at scale.

My Department is currently drawing up the criteria for access to this scheme, to be announced in the coming weeks, along with further affordability measures.

  • The combination of the Capital Gains change and the more than doubling of the vacant site levy to 7%, will tackle the problem of hoarding and release more land for building. (More supply, more homes, more affordability. Any new home built, whether private or social, takes pressure off other parts of the system).

In terms of vacant housing, vacancy teams in the local authorities are working to identify vacancy hot-spots, with the cities due to report in a couple of weeks, and the rest of the country by December.  It is worth noting that the true level of vacant homes looks to be far lower than previously thought.

Nevertheless, the Budget announcement in relation to tax deductibility for pre-letting expenditure incurred in bringing vacant housing back into use for rental purposes is welcome.  We are also looking at other measures to address vacancy, including some important changes to the Repair and Lease scheme, and these will be announced shortly under a vacant homes package.

Conclusion
Budgeting is about choices – Government is about taking responsibility, making decisions.

In Budget 2018, we have made the right choices and we have taken decisions when it comes to:

  •  increasing our State building programme,
  • supporting homeless people,
  • and ensuring that more homes can be built, more quickly and at more affordable prices.

Additional money has been made available for regeneration, disability, the elderly, traveller specific accommodation, pyrite remediation and climate mitigation.

My Departmental colleague, Minister English, will elaborate on some of these other funding priorities across my Department’s broad policy remit.

ENDS

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