A new State authority that would be set up for a three-year period to drive the construction of 90,000 homes will be a key plank of the Fianna Fáil manifesto at the next general election.
The party is drafting a new housing policy that will be unveiled in the spring and sold to the public in the months leading up to the election as the party’s proposed solution to the housing crisis.
Housing has been identified by those across the political spectrum as the likely battleground at the next election, and Cabinet ministers believe Fianna Fáil and Sinn Féin want to fight the Government on that issue.
The new authority being proposed by Fianna Fáil would use a mixture of public and private funding to keep it off the State’s balance sheet. It would also invest all Nama’s profits – estimated to be around €3 billion – in house building.
Party sources say Nama would have to be wound up earlier than the intended date of 2020 and are open to recasting the so-called “bad bank” as the new housing agency or establishing something entirely new.
Barry Cowen, the Fianna Fáil housing spokesman, is working on the new policy document. The new agency would be given tightly defined terms of reference, and its first task would be to rapidly build homes for all of those who are homeless.
It would also be able to recommend legislative changes, planning guideline amendments and other proposals to government and would be in place for a “pre-determined timescale” of around three years, according to sources.
It will identify and manage land banks held by councils and State agencies for development. To supply social and affordable housing, it would contract private developers to build houses and lease the properties to local authorities or housing agencies for a period of about 70 years.
Previous models being cited as examples include the Dublin Docklands Development Authority and the National Roads Authority. Sources say councils have "lost the expertise necessary to drive social house building from within".
Well-placed sources said the proposals in development are not offers to the Government of policies that can be taken on board but will form an alternative platform for election.
“They must now be interpreted as alternatives. They must be considered in the context of Fianna Fáil doing things differently, with a sense of urgency and the necessary zeal and desire.”
The agency would be established for three years to offer “shock treatment” to the housing market.
The agency’s terms of reference will also outline how Fianna Fáil wants to increase the supply of social housing, affordable housing, properties for the rental market, housing for older people who want to downsize and normal, private housing supply to meet market demand.
It would raise just over half of its resources – 51 per cent from private funds, with the remainder coming from avenues such as the Irish Strategic Investment Fund. This would allow the agency to remain off the State's balance sheet. Fianna Fáil sources said this would help avoid any difficulties on State aid rules.
"We acknowledge private investment must exceed State funding and will work with Eurostat to achieve that."
It is expected that there will also be moves to reduce costs for developers in the policy document. Mr Cowen will adhere to Fianna Fáil policy to reduce the VAT rate from 13.5 per cent to 9 per cent for the construction sector for a set period of time, as well as reducing certification costs, among other measures.
It would also finance private developers “at competitive rates”, party sources said.
Micheál Martin has said health and housing are the two key issues for the party as it works through the confidence-and-supply agreement with the Government.
The agreement is due to expire after the October budget. Although Taoiseach Leo Varadkar has raised the possibility of extending it, Mr Martin has said he will not give the Government a "blank cheque".
Fianna Fáil wants to begin drafting policies that are outside the agreement and that will offer a point of difference to Fine Gael at the next election.