The number of affordable and social houses in every new housing development in the State should be doubled, Housing Minister Darragh O’Brien will propose to Cabinet next week.
Part V of the Planning and Development Act requires 10 per cent of new housing developments be earmarked to meet wider social needs with local authorities entitled to obtain it at existing use value.
Now Mr O’Brien intends to increase that portion to 20 per cent, comprised of 10 per cent social housing and 10 per cent affordable housing. A memorandum is expected to come before Cabinet next week.
On the history of Part V Mr O’Brien said it had been originally 20 per cent when introduced by minister for the environment Noel Dempsey two decades ago but was subsequently reduced to 10 per cent.
“It’s back up to 20 per cent now but we want want to have the extra 10 per cent affordable,” Mr O’Brien told The Irish Times. “ I think it’s a decent proposal.”
Mr O’Brien set out his targets for new home builds and defended his controversial policy to offer more help to younger buyers to purchase homes in alliance with the State under the shared equity scheme.
This has been strongly criticised by the Opposition. Reservations were also raised by the Central Bank, the ESRI and from Robert Watt, when he was still secretary general of the Department of Public Expenditure.
The Covid-19 pandemic has hugely damaged housing construction numbers. “Last year we were projecting 25,000 homes and then Covid hit. We finished on about 72 per cent on social housing targets, and built 21,000 overall.
“This year the shutdown has been deeper and more acute. We have had a 14-week shutdown and some sites have not been open since before Christmas. We need to build 33,000 homes a year and we are way off that.”
Defending the Land Development Agency (LDA), he said it has never been about selling off State land for private speculation or private profit, despite Opposition claims. The agency is “really different” from the one envisaged by the previous government, he said, because the majority of homes it will be involved in building will social and affordable.
The LDA Bill currently before the Oireachtas stipulates that half of all houses on its lands would be affordable, up from 30 per cent. The LDA is currently working on plans for nine sites.
However, some of these developments would have much higher shares of social and affordable housing. In some cases, 90 per cent could be affordable, with the remainder reserved for social local authority-controlled housing.
The Serviced Sites Funds, introduced in 2017, is aimed at developing lower-cost housing on local authority lands by giving grants to put in infrastructure such as roads, water, sewage and other services.
Mr O’Brien instanced a scheme in Lusk, Co Dublin, where homes were available at between €165,000 to €265,000 and referred to other schemes in Donabate and in Boherboy, Cork.
Six thousand homes are to be built under the sites fund, and more will be added. However, the scheme has failed to meets its own targets over the past four years.
Mr O’Brien’s proposal for a shared equity scheme under the Affordable Housing Bill has been criticised by Sinn Féin, which said a similar scheme in the UK increased house prices by 6 per cent.
Under plans to go to Cabinet, the State will be able to take up to a 30 per cent stake in a property. The target is for take-up of about 6,000 over three years.
“I believe it will work. We have cleared a number of significant hurdles,” Mr O’Brien added. “It will give people locked out of the housing market real hope of owning their own home. It will not increase debt,” he maintained – the State’s servicing fee for a 20 to 30 per cent equity stake would be zero for the first five years and about 1.75 per cent for the following decade.
Rejecting charges it would inflate house prices, he said: “A similar scheme in England led to a 14 per cent increase in supply with less than 1 per cent increase in house price inflation,” he said.
“At the moment you have people paying rent at twice the amount of what they would be paying in a mortgage. I had a couple in last week who were paying €2,100 in rent while they would be paying €1,100 if they had a mortgage.”