Statement from Eoghan Murphy, Minister for Housing, Planning and Local Government Budget 2018

Published on Tuesday, 10 Oct 2017
Minister Eoghan Murphy

Today is World Homeless Day, and today we have over 8,000 people who are homeless.

That’s not to say that they are sleeping out on the street every night. Thankfully we have emergency accommodation in place, with more coming, so nobody should be forced to sleep rough. And, the rate of homelessness in Ireland is low by international standards, which is a good thing.

But it’s also a good thing that, as a society, we believe that this still isn’t good enough. And that we demand of ourselves that we do more.

One family in emergency accommodation is one family too many.

We will be increasing our supports for the homeless next year, as well as our social housing tenancy supports. There will be a 35% increase on the current side of the Housing budget to over €760m.

  • The homeless budget will increase by €18m to €116m.
  • This doesn’t include the at least €50m to be delivered by Local Authorities and the HSE.
  • And it doesn’t include the Hubs programme – 6 new facilities to come on-line in the next two months with potential for more.
  • Resources will be provided to allow for more than 3,000 exits from homelessness in 2018.
  • The HAP budget will increase by €149m to €301m.
  • This will support a further 17,000 households to be accommodated.
  • In all, we will meet the housing needs of 25,500 new households on Local Authority waiting lists next year.
  • Put another way, every working day of the week, 98 new social housing households will be supported by the State in 2018.
  • And for those in mortgage arrears, we are providing an increase of €5m to expand the mortgage to rent scheme, increasing it to €22m in 2018, so that people can stay in their homes.

All of these resources will be directed alongside the new measures announced at the recent Housing Summit with local authority Chief Executives. For example,  the new inter-agency group to coordinate service delivery, the 200 additional emergency beds that will be in place by Christmas, the creation of exit coordinators, preventative measures like the roll-out of HAP place-finders nationwide, appointing a Housing First national director and a move to a ‘one refusal’ only policy.

In August, we saw near record levels of presentations of families in Dublin, but we also saw, for the first time in many months, a decline in the number of families staying in emergency accommodation in Dublin. This is welcome progress, slow but welcome. We can take our learning from Dublin and use that to tackle the growing number of homeless families outside of Dublin more quickly.

We have to be sensitive to the individual needs of families, some of which are more complex and require tailored solutions. Sometimes no matter what we do, it won’t be enough to help an individual beat the complex challenges they may find in their personal lives. But that doesn’t mean that we shouldn’t keep on trying.

I’d like to thank all those people whom are working on the front line, in local authorities and in the voluntary sector, to tackle this problem.

Building more homes, more quickly, at more affordable prices

While we must continue to deal with the immediate issue of homelessness, building more homes and using our existing stock of housing and land more efficiently is the ultimate solution.

We have a plan in Rebuilding Ireland and it is working. Since that plan was launched just over a year ago, planning permissions are up 49% and commencement notices are up 47%.

Over the past number of months, we have brought about significant changes that will have a meaningful impact on the house building landscape, for example:

  • The entry in to force of the new An Bord Pleanala fast-track planning permission process in July,
  • Earlier this week I signed off on 18 of the 34 LIHAF infrastructure investment projects to open up new land banks and provide homes at affordable prices,
  • In September I announced a change in policy so that Local Authorities will move from buying to building new homes,
  • And, last week I signalled the removal of some key restrictions to apartment building, to make them more viable and affordable.

Today, the Government removes what it sees as the last significant obstacles to building more homes, more quickly, and at more affordable prices:

  • By investing more in direct house-building by the state,
  • 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.

Build Programme

Next year the budget for housing in my Department will increase by 46% (or €600m) to €1.9bn.

That’s almost €2 billion directly aimed at our housing shortage & homelessness crisis.

On the Capital side, this represents an increase of 62% to €1.14bn – to build new homes.

The Government is also prioritising social housing as we look to the near horizon, with an additional capital allocation of €500m being made available out to 2021.

So what’s that going to allow us to do?

  • 3,800 homes will be built directly by the state,
  • a further 1,200 will be Part V builds or rebuilt vacant homes,
  • 900 homes will be delivered through acquisitions
  • and a further 2,000 homes will be secured through long-term leasing arrangements.  (Total of 7,900).

The remaining supports will be provided through the Housing Assistance Payment and the Rental Accommodation Scheme.

Looking out to 2021, the additional €500m of capital funding will allow us to increase the overall ambition of Rebuilding Ireland from 47,000 to 50,000 social housing homes, as recommended by the Cross-Party Special Oireachtas Housing Committee last year.  More than 30,000 of these will be directly built by the state.

Overall, the funding earmarked for the Rebuilding Ireland Action Plan is being increased from €5.35bn to over €6billion.

We must always produce a certain percentage of the total housing output in a given year, directly by the state. That way we can be confident of protecting our most vulnerable citizens, even in a future time of crisis.

Every new home built, to buy or to rent, or for social housing, takes pressure off another part of the system.

Vacancy

When it comes to vacant land that could be built on, we are going to more than double the vacant site levy to 7%.

The 3% levy becomes a liability this January. If land owners on the register fail to build next year, then on 1 January 2019, their liability from that point on will increase to 7%. If they continue to hoard that land through 2019, then they will end up with an effective liability of 10% over 2018 and 2019 combined.

Land owners have been given plenty of notice and still have the opportunity to avoid this levy by building homes on their land.

Coupled with this, the change in relation to CGT that the Minister for Finance announced today is also important as it means that there’s no longer an incentive not to sell residential land or property. I’d like to thank him for taking this measure.

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 Minister for Finance’s announcement today in relation to tax deductibility for expenditure incurred in bringing a vacant home back in to use is welcome.  We are also looking at other measures, including some important changes to the Repair and Lease scheme, and these will be announced shortly under a vacant homes package.

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, because they can’t afford to rent, or because their rent is so high they can’t afford to save to buy a home.

Some affordability measures are already underway and working well:

  • 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, like Drogheda and Greystones did at the end of Q2.
  • As indicated at the outset, 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.
  • 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.

Conclusion

When it comes to housing there are of course additional resources for next year for a range of areas, like disability, the elderly, climate mitigation, traveller specific accommodation, pyrite remediation, and regeneration. I will elaborate on these further in the course of the Dail debate on the Budget.

Addressing our housing shortage and homelessness crisis is the Government’s number one priority. Budgeting is about choices and I believe we have made the right choices 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.

I’d like to thank my government colleagues in the Independent Alliance for their constructive proposals, and Fianna Fail for their constructive engagement.

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