The Housing for All Plan (the “Plan”), published by the Irish Government on 2 September 2021, will replace the ‘Rebuilding Ireland Strategy’ launched in 2016. It has been dubbed the “single largest investment in housing since the 1960’s”.
In order to address Ireland’s continuing housing crisis, the Plan will require the public and private sector to work together to reach the overall target of 300,000 homes by 2030, the breakdown of which is as follows:
- 170,000 homes for the private market;
- 90,000 social housing units;
- 36,000 affordable housing units; and
- 18,000 cost rental properties.
In order to reach the above lofty goals the State intends to spend €4 billion a year to 2030 on various State interventions and capital investments.
The Department of Housing commissioned a report from the Economic and Social Research Institute (ERSI), which indicated that an average of 33,000 new homes needed to be built a year in order for the housing crisis to be successfully addressed by the Government. In order to achieve the goal of 33,000 new homes per year, the Plan provides four pathways to achieving four overarching objectives:
- Supporting home ownership and increasing affordability;
- Eradicating homelessness, increasing social housing delivery and supporting social inclusion;
- Increasing new housing supply; and
- Addressing vacancy and efficient use of existing stock.
An overview of each of these pathways is set out below:
1) Pathway to Supporting Home Ownership and Increasing Affordability:
An essential feature of this pathway, and of the entire Plan, is the implementation of the Affordable Housing Act 2021 (the “Act”), enacted 21 July 2021. The goal of this Act is to provide support for people on low to moderate incomes in purchasing their first home. The Act also puts a new form of rental tenure called ‘Cost Rental’ homes on a statutory footing, whereby rent is based on the cost of provision rather than on profit maximisation.
In addition, there are two new affordable purchase schemes that will be introduced under this pathway:
- The ‘Local Authority Affordable Purchase Scheme’: This scheme will involve Local Authorities delivering, or facilitating the delivery of, new homes in areas where affordability challenges have been identified. The provisions of this scheme have been placed on a statutory footing in the Act and will see homes being provided to primarily first-time buyers at reduced rates. The aim is to make homes available at average purchase prices of €250,000 across the country. In practice this will see a subsidy of up to €100,000 (depending on location and need) being provided towards the cost of a home. The Local Authority will then retain a stake of up to 30% in the home, which the homeowner can either choose to buyout at a later date, or the local authority will redeem it when the home is sold or transferred; and
- The ‘First Home Scheme’: This scheme will be nationally available and will see the State partner up with the banking sector to support first time buyers to buy a home in a private development by taking an equity stake in the home equivalent to the level of funding provided. An area-based ceiling price for houses and apartments, based on open market prices, will be set and up to 20% equity support will be available to purchase these homes (30% if the Help to Buy scheme is not utilised). The specific functioning of this will see no service charge being applied to the equity stake for the first five years, with a modest annual charge to be applied thereafter.
Some of the other key measures to be implemented to achieve this objective are as follows:
- The roll out of cost rental properties. Under this tenure rents charged only cover the cost of developing, financing, managing and maintaining the homes. It is anticipated that approximately 18,000 cost rental homes will be funded up to 2030. The intention is that households with a moderate income will be able to avail of rental accommodation at least 25% below the market value;
- The implementation of ‘Project Tosaigh’, will see the Land Development Agency (the “LDA”) intervening in slow or stalled developments, through an open and transparent process, in order to ascertain the potential to enter into strategic partnerships with landowners in order to unlock and accelerate its delivery. The LDA will be funded by an additional €1bn above current levels to enable the delivery of affordable homes on such lands that otherwise would not be delivered or would be delivered much slower;
- The requirement of Part V of the ‘Planning and Development Act 2000’ which provides that 10% of newly built developments be allocated to social housing has been increased to a mandatory 20% and will now include provision for affordable and cost rental housing, as well as social housing. The increased obligation of 20% will apply to all land transacted after the new legislation comes in to force, or bought before 2015, where planning permission has not been granted. It is worth noting that current planning permissions and land purchased between 2015 and 2021 will continue at the 10% threshold until 2026 when the 20% threshold will become a requirement for all land regardless of when it was purchased;
- Reform of the ‘Local Authority Home Loan Scheme’ to lower interest rates for new borrowers will be lowered by 0.25% and raise the maximum income ceiling for single persons to €65,000 in areas where the house price limit under the scheme cannot exceed €320,000 (Dublin, Cork, Meath, Louth, Kildare, Wicklow and Galway);
- Set out a new owner-occupier guarantee which will enable Local Authorities to specify a minimum proportion of homes in a new development as being restricted to owner-occupiers; and
- Increased protections for tenants in private rental accommodation to include legislation with provisions to address long-term security of tenure, extension of rent pressure zone protection to the end of 2024 with increases linked to the Harmonised Index of Consumer Prices and introduction of minimum BER ratings, where feasible, for private rental properties commencing 2025.
2) Pathway to Eradicating Homelessness, Increasing Social Housing Delivery and Supporting Social Inclusion:
The key measures to be implemented in order to achieve this objective are as follows:
- Provide more than 10,000 social homes each year, with an average 9,500 new build social housing homes for the next five years to 2026;
- Provide Local Authorities with multi-annual targets for social housing delivery over the lifetime of the Plan with Local Authorities submitting to the Minister by December 2021 their housing delivery action plans (for social and affordable housing) for the next five years;
- Expanding the “Housing First” scheme which provides permanent, secure accommodation for people with a history of rough sleeping or long-term use of emergency accommodation, with the provision of intensive supports to help maintain their tenancies. The aim is to achieve 1,200 new “Housing First” tenancies over the next five years;
- Increased funding to Approved Housing Bodies (“AHBs”) through increases in the budget available for the Capital Advance Leasing Facility;
- Increased use of Public Private Partnerships to deliver social housing in cities, in particular Dublin, with the delivery of the tenancy management element by AHBs;
- The phasing out of new entrants to the current leasing arrangements for long term leasing and enhanced leasing with a shift towards new build social homes;
- Strengthening the ‘Mortgage to Rent Scheme’ by ensuring that it meets the needs of those in long-term mortgage arrears, with a delivery of an average of 1,000 solutions every year;
- Reform of the social housing system (to include standardising rents across the country, review of income eligibility and the tenant purchase scheme); and
- Improvements to the quality and quantity of Traveller-specific accommodation, as well as providing continued capital funding for housing for vulnerable members of society such as older people and those with disabilities through the ‘Capital Assistance Scheme’.
3) Pathway to Increasing New Housing Supply:
In order to effectively deliver on this aspect of the Plan’s intended goals, a robust system of financing has been established. As mentioned above, €4 billion is to be spent each year on housing, through an overall combination of €12 billion in direct Exchequer funding, €3.5 billion in funding through the LDA and €5 billion in funding through the Housing Finance Agency.
Through this funding, an annual average of 9,500 new build social homes and 6,000 affordable and Cost Rental homes will be provided over the lifetime of the Plan.
Some other key measures to be introduced are as follows:
- The provision of additional State lands to the LDA to provide up to 15,000 homes;
- Kenny Report’ style powers introduced in the form of a new system of Land Value Sharing which will mean in practice that the additional value accrued due to land being rezoned for housing will be shared in a fairer way with the State and used for the benefit of the community. This will be complemented by the immediate increase from 10 to 20% in the value uplift going to the provision of social and affordable housing. Initially, land value sharing will apply when land is newly zoned for residential development. The uplift will be used to secure land or financial contributions for the provision of infrastructure and social/ affordable housing (subject to need);
- The introduction of new Urban Development Zones which will provide a coordinated, plan-led approach to the delivery of residential and urban development;
- The introduction of a new fund, Croí Cónaithe (Cities) Fund to encourage greater activation of existing permissions (40,000 out of the 70-80,000 non activated planning permissions are in Dublin);
- Introduce a new tax to activate vacant land for residential purposes which will replace the current Vacant Site Levy and collect data on vacancy in residential property with a view to introducing a Vacant Property Tax;
- Reform of the planning system, with the Strategic Housing Development Process being replaced with new planning arrangements for large-scale residential developments (“LSRD”). The key goal for this reform will be to promote efficiency and return decision making for development to a local level. There will be three stages to a LSRD planning application, the pre-application consultation stage, the application stage (planning authorities to determine applications within eight weeks of receipt and limited scope for further information requests) and the appeal stage (An Bord Pleanala will be required to determine LSRD appeals sixteen weeks from receipt with limited scope for further information requests). These arrangements will apply to applications for 100 homes or more or student accommodation bed spaces of 200 bed spaces or more;
- Review of the planning code to be conducted with the Office of the Attorney General and competed by December 2022;
- To compliment this reform, new legislation to reform the judicial review process will also be introduced as well as the establishment of a new division of the High Court dealing with planning and environmental issues;
- Improve construction sector innovation and attractiveness and deliver the labour force required to reach the goals set out in the Plan; and;
- Ensuring the necessary capital is available for the housing required to include legislation for increased borrowing of the LDA and Housing Finance Agency).
4) Pathway to Addressing Vacancy and Efficient Use of Existing Stock:
The key measures to be introduced to achieve this objective are as follows:
- The introduction of the ‘Croí Cónaithe (Towns) Fund’ for servicing sites for new homes in regional towns and villages and to support refurbishment of vacant houses;
- The implementation of a CPO Programme for vacant properties, the objective of which will see Local Authorities acquire at least 2,500 vacant units by 2026 and present them to the market for sale;
- The incorporation of activation of vacant properties as key criteria in the Urban Regeneration and Development Fund (URDF) and the Rural Regeneration and Development Fund (RRDF);
- Reform of the ‘Fair Deal Scheme’ to remove the disincentive to bring vacant homes on the market and rental of vacant homes;
- Tackle unfinished estates with a view to minimising any vacancy levels;
- Potential introduction of a vacant property tax, the merits of which will be assessed on receipt of the data from the Local Property Tax returns in November 2021;
- The introduction of new regulations that will require short-term and holiday-lets to register with Failte Ireland; and The enhancement of the Repair and Leasing Scheme which targets owners of vacant properties who cannot afford or who do not have access to the funding required to bring the properties up the standard of a rental property.
Supporting the Four Pathways: Enabling a Sustainable Housing System
Coupled with the above, the Plan also intends to take a number of actions in order to support these four pathways. These actions include an investment of €4.5 billion into water infrastructure, reducing the cost of construction through a coordinated Government approach, establishing a register of competent builders by placing the Construction Industry Register Ireland on statutory footing, strengthening the delivery teams and project management of local authorities.
Commission on Housing
The Programme for Government commits to establishing a Commission on Housing to examine issues such as tenure, standards, sustainability, and quality-of-life issues in the provision of housing. It is planned that the Commission on
Housing will work to bring forward proposals on the referendum on housing. The Commission on Housing will be formally established later in quarter 4 of 2021.
Governance and Reporting on the Plan
A unit within the Department of the Taoiseach will be established and will be responsible for the ongoing monitoring and oversight of the Plan.
Quarterly progress reports setting out performance against the targets and actions set out in the Plan will be produced and published.
- The Plan reflects a shift by Government towards empowering the LDA and Local Authorities to procure more State-led housing construction. Key pieces of legislation, namely the Land Development Agency Act 2021 and the Act have been enacted to provide the legislative basis for many of the proposals. Further legislation and regulations will be required to roll out the Plan in full.
- The move away from long-term leasing may be predicated on an assumption that the other means of delivery of housing will start to come on stream now that the LDA and measures under the Act are on a legislative footing. To date it has been seen as a means of supplementary delivery in a time of acute housing shortage and where other options were not necessarily viable in the short term.
- The plans to reform the planning process are in reaction to the current system for ‘fast track’ planning for residential developments, which has faltered due to the number of decisions being referred to the High Court under the judicial review process. What will be of concern to developers and investors, given the delays and uncertainty that are currently being encountered in the planning process, will be whether similar issues will be encountered given that the introduction of new legislation to reform the judicial review process and establishment of a new division in the High Court to deal with these issues is not expected until 2022.
- The LDA, Local Authorities and AHBs, together with the State agencies that support them, will have a leading role in ramping up the delivery of the supply that is promised.
- There is a lead in time for the implementation of the change in the requirement of Part V of the ‘Planning and Development Act 2000’ from 10% to a mandatory 20% (i.e. current planning permissions and land purchased between 2015 and 2021 will continue at the 10% threshold until 2026 when the 20% threshold will be a requirement for all land regardless of when it was purchased).
- Initially, the new system of Land Value Sharing will apply when land is newly zoned for residential development.
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