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Minister Murphy – Statements on Affordable Housing to the Oireachtas

Published on Thursday, 29 Mar 2018
Minister Eoghan Murphy

Check against delivery

A Cheann Comhairle,

At the outset, I wish to address the February homeless figures that I published yesterday. This latest report repeats what we saw in January and would seem to indicate a worrying trend since the beginning of the year in relation to the number of families presenting to our homeless services.

However, I want to reassure the House that we are putting a huge amount of time and resources into helping people in homelessness, every single day and night of the week.

These efforts are having an effect:

  • the number of single adults in homelessness did fall last month, by 84;
  • the number of rough sleepers is dramatically down – 50% on last year. People would have seen the huge efforts made around Storm Emma;
  • in January and February almost 300 families have been prevented from entering emergency accommodation or have exited it.
  • of the more than 100 families that presented in Dublin in February, only 20 were accommodated in hotels. During 2017, more than 2000 families left hotels into sustainable tenancies, the majority into homes.
  • last year more than 4,700 adults exited homelessness.

So a huge amount is happening and it’s thanks to our partner organisations whom we fund through tax payers’ money – people like Peter McVerry Trust, Simon and Focus Ireland, working with our own teams.

But the underlying challenge remains – to build more homes, and to do this at affordable price and rental levels.

Commitment:

The Government is absolutely committed to ensuring that people throughout Ireland can access affordable housing, based on their means.

For people and families, particularly those renting in our cities and urban areas and maybe trying to save to buy their first home, this can be a real challenge.

For this reason, when I was appointed as Minister for Housing, Planning and Local Government, I made a firm commitment that housing affordability would be a central focus of my work.

To make housing accessible and affordable, we need all elements of the housing system working optimally, delivering a mixture of homes, social and affordable, apartments and houses, to rent and to buy.

Context: 

To judge our housing system today we need to put the progress that has been achieved in some context.

Lest we forget the situation in the early part of this decade:

  • residential construction was on its knees;
  • housing construction had fallen by 90%;
  • there were a handful of social and affordable homes being built;
  • there was no ‘starter home’ estates being built;
  • employment in the construction sector fell by almost two thirds;
  • local authorities had reduced staff numbers by a third;

The residential construction sector in Ireland was decimated and we all acknowledged at the time that it would take time to rebuild it.

Government Action:

The Government took immediate remedial action to get Ireland building homes again, culminating in the comprehensive Rebuilding Ireland – Action Plan for Housing and Homelessness in July 2016.  

I’m glad to say all that all the hard work is paying off and Rebuilding Ireland is now having a real impact.

In 2017, over 25,000 households had their social housing needs met, significantly ahead of target.

Increasingly, under the €6 billion programme, social housing will be delivered through new build.

To get house building at scale moving again, the Government has:

  • invested €200m in key enabling infrastructure;
  • updated, streamlined and de-risked the planning and regulatory regime for houses and apartments;
  • progressed large scale local authority developments, which will deliver 2,500 new homes; 
  • made development finance available to house builders; and,
  • helped first-time buyers in putting together their deposit.

There has been a massive concerted effort across the public and private sectors in Ireland to get Ireland building homes again and it is working.

I want to put on the record the Government’s recognition of all that work.

Current Situation:

All this hard work is paying dividends.

Housing activity indicators continue to show encouraging trends.

Planning permission was granted for almost 20,800 new homes in 2017, an annual increase of 27%.

The CSO's preliminary Quarterly National Accounts for 2017 showed a 33% growth in construction investment for residential.

Increasingly, we are seeing significant residential developments coming through the new Strategic Housing Development (SHD) process in An Bord Pleanála.

I’m sure you will have seen granting of permission for the 420-home scheme on the site of CIE's former lands in Cabra in the papers this week – another major step forward in getting large-scale developments moving. 

Rebuilding Ireland is working, the construction sector is recovering and getting back into house-building at scale. … But we won’t be taking the foot off the pedal.

Affordable Housing:

As Ireland continues to progress towards delivering the levels of housing supply we need, the Government is committed to ensuring that the new homes are accessible and affordable.

Recognising that people want a choice of affordable purchase and rental, depending on their stage of life and circumstances, we need to be providing both.  

Importantly, new measures introduced are specifically targeted at delivering more affordable homes which have the potential to deliver more than 3,000 new affordable homes to buy or rent initially.

The target is for the delivery of at least 10,000 new affordable homes in the medium to longer term.

The emphasis is on delivering affordable homes from our State land bank in urban areas where affordability issues are greatest.

Initial indications from local authorities in the main target counties around the main cities highlight the potential for almost 4,000 affordable homes from their land.

To support local authorities, I have secured additional infrastructure funding of €25 million, for infrastructure on their sites to facilitate affordable housing provision. I expect that the call for proposals for this funding - €15m of which is available this year – will issue to local authorities shortly after Easter.

Additionally, as part of Budget 2018, I announced that an additional €50 million Exchequer funding will be available for a second LIHAF call. This will be subject to matching funding by local authorities, bringing the total available to €66.5 million. The criteria for the second call are currently being finalised and I expect to announce phase 2 of LIHAF in April or early May 2018.

Yesterday, I published details in respect of 30 major public infrastructure projects which had received final approval under the first phase of LIHAF in December 2017 and February 2018. These projects will enable and activate the delivery of almost 20,000 new homes across public and private sites by 2021. Over 28% or some 5,600 of these 20,000 new homes will be social or affordable homes.  In addition, a further 5,600 of the homes will have a LIHAF related cost reduction and another 8,800 will be sold at market rates, greatly increasing supply and with many in locations offering very good affordability.

Affordable to Buy:

In January last, I announced new initiatives to help people buy a home.  

Firstly, we’re supporting first-time buyers to buy a new or second-hand home through the new local authority home loan;

Eligible first-time buyers can now access affordable mortgages from local authorities with fixed interest rate options of 2% to 2.25% for terms of up to 30 years.

With the fixed interest rate over the lifetime of the borrowing, borrowers have absolute certainty of their repayments for terms of up to 25 or 30 years.

The local authority also has greater certainty of the borrowers' capacity to repay the debt over the lifetime of the loan.

As of the end of last week, there had been over 90,000 visits to the Rebuilding Ireland Homeloan website and some 1,350 application forms had been downloaded.

To ensure the supply of affordable homes for purchase, affordably priced homes will be built as part of local authority mixed-tenure schemes on appropriate sites.

For example, two large Dublin City Council sites – at O'Devaney Gardens and Oscar Traynor Road – are being procured on the basis of a 30% social; 20% affordable purchase and 50% private market housing mix. Dublin City Council is progressing the procurement of these sites as a top priority.

In total, the two sites will deliver over 1,200 new build homes. And some 240 of these will be available for affordable purchase.

I expect to see more sites following suit.

Affordable to Rent:

As part of this Government’s reform of the Irish housing system, it is clear that we need a third sector to sit in union with social and private market housing delivery.

That is why the development of a new affordable “cost rental” sector is so strategically important.

The key benefit of this model is that the rented home will remain a publicly owned asset and future rent increases can be controlled to ensure affordability.

Looking to European cities like Vienna and others, if we can deliver cost rental homes into the market at scale, we can make a sustainable impact on:

  • housing affordability;
  • national competitiveness;
  • the attractiveness of our cities as places to live as well as work in;
  • as well as providing security for tenants of an older age.

I am determined to get some major cost rental projects moving in Dublin and then roll it out more broadly.

Two cost rental pilot projects are currently being progressed in Dublin – in Dundrum and Lusk.

While the projects are relatively small-scale, they are providing very valuable learning to the system, and will shape the model for future larger-scale projects.

We have been working with the EIB and other key stakeholders and it is my intention to announce the first major cost rental project in Dublin city shortly with a programme of cost rental projects across Dublin and other cities to follow.

Conclusion: 

Ireland is recovering from the economic downturn - the economy is growing at 3.2% and unemployment is very low at 6%.

Given the upheaval in our residential construction sector and housing supply in the recent past, it is understandable that housing supply has lagged behind.  But I am confident, and all the indicators show, that it is catching up.

This Government has made housing a top priority and we are making real progress.

Rebuilding Ireland is delivering in terms of addressing short-term supply and we are also planning now to ensure a much more sustainable housing system into the longer term.

It’s working – all activity indicators are trending positively.

All efforts are now being concentrated towards increasing output, particularly in terms of affordable homes – to rent and to buy.

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