Rebuilding Ireland & Budget 2017 - An overview for Property Agents, Developers, Builders and Investors
Introduction
· My compliments to the Sunday Business Post for arranging this third annual Residential Property Summit.
· Last year’s Summit called for three things from Government, namely the appointment of a Housing Minister, the preparation of a cohesive and sustainable housing strategy and for a root and branch review of the planning system.
· Those three wishes have now been granted and I am pleased to be here today to outline my plans for the sector under the Rebuilding Ireland Action Plan, as reinforced under Budget 2017. Niall Cussen from the Department will also update you on planning matters later today.
· I firmly believe that we have at last returned to a period of sustainable recovery and growth for the residential sector.
· For several years now we have seen a gradual increase in housing output but it has been painfully slow.
· Already though the Rebuilding Ireland Action Plan is starting to work.
· In particular the strong increase in the Government’s social housing investment programme to nearly five and a half billion euro is having a very positive effect.
· The range of fiscal incentives for first-time buyers, investors and landlords, is also bringing a renewed sense of confidence to the sector and will, I believe, be successful in bringing about the desired acceleration in activity.
· As is to be expected in a period of transition, some challenges and constraints persist, not least in the areas of affordability, viability, and the chronic under-supply of housing across all tenures.
· At an overall level, while at least 25,000 new homes a year are needed to meet demand, annual output fell to as low as 8,300 in recent years.
· This situation is no longer tenable and we must and will overcome these challenges.
· My essential message to all of you – whether you are a property agent, investor, developer, builder, finance provider, local authority or approved housing body - is that it is now time for us to get back in earnest to doing what the public expect of us. We must work together to ensure that affordable, quality and accessible housing across all tenure types is available to everyone who needs a home.
Economic and Construction Industry Outlook
· Ireland’s recovery from the sharpest economic contraction in its history is now firmly established.
· The ESRI’s latest economic projections, published only yesterday, forecast a baseline sustainable growth rate for the Irish economy of 3% per annum between now and 2025.
· Depending on the final form that BREXIT takes, this baseline scenario may vary upwards or downwards (depending mainly on whether the UK remains within the EEA or is subject to WTO rules) but will remain positive.
· The labour market continues to improve with our average annual unemployment rate currently standing at 7.7% with the ESRI predicting it will fall to just over 6% over the medium term.
· In relation to the demand for housing, the ESRI projects the demand for housing will move to 30,000 homes per annum in 2024.
· We need to act fast if we are to keep pace with the current and emerging demand for homes and to avoid the housing supply problem itself becoming a drag on economic growth.
Rebuilding Ireland Action Plan
· The “Rebuilding Ireland: Action Plan on Housing and Homelessness” was launched on 19 July 2016 and is a comprehensive, well-resourced and action-oriented framework aiming to turn the housing supply shortage around between now and 2021.
· The Action Plan sets out a number of detailed actions across five Pillar areas aiming to:
ü address homelessness
ü increase and accelerate the delivery of social housing
ü build more private homes
ü improve the rental sector
ü make better use of existing housing stock
· For social housing provision, I have secured €5.35 billion in public funds to invest in delivering 47,000 additional social housing units over the period 2016 to 2021.
· Our overall target is to increase total housing output to 25,000 homes per year by 2021. This represents a huge challenge given that output in 2015 was just over 12,600 new homes.
· The Action Plan is not simply about bricks and mortar. The aim is to build strong communities and to serve the housing needs of individuals more effectively than before.
Homelessness
· In order to address this top Government priority, homeless funding will increase by 40% next year, from €70m in 2016 to €98m in 2017.
· Rebuilding Ireland has set a clear target on family homelessness which is that, by mid-2017, hotels will only be used for emergency accommodation in limited circumstances.
· To deliver on this target, a range of early housing solutions are being put in place:
- 1,500 rapid-delivery units
- 1,600 vacant units sourced by the Housing Agency
- Expanded Homeless HAP Tenancies – 550 in 2016 and 1,200 in 2017.
· Strong progress has been made to date. To date in 2016 over 650 HAP tenancies have been created for homeless households in the Dublin Region. The 2016 target (550 tenancies) has therefore been exceeded.
· In addition, 350 rapid delivery units will be advancing by year end, and the Housing Agency will have acquired 200 vacant units for homeless people by the end of the year.
· Rough sleeping is the most acute form of homelessness. An additional 210 emergency beds will be provided over three sites in Dublin by the end of this week. This will be enough to cater for all those currently rough sleeping while allowing for additional capacity.
· The target for the Dublin Region ‘housing-first’ initiative has been tripled under Rebuilding Ireland from 100 to 300. A Focus Ireland – McVerry Trust consortium is supporting rough sleepers and long-term homeless persons to move into secure tenancies with wrap-around health supports funded by the HSE.
· Housing authorities assisted more than 1,350 sustainable exits from homelessness in the first half of 2016. I expect this figure to be in the region of 2,700 by year end, a record level of exits from homelessness.
Building More Homes
· In terms of the wider housing market, the objective is to double housing output to deliver over 25,000 units per annum on average by 2021. A range of actions are already underway in pursuit of this objective.
· The Planning and Development (Housing) and Residential Tenancies Bill 2016 is working its way through the Oireachtas with a view to enactment by end-2016. This will enable large-scale housing development proposals (100 plus homes or student accommodation units) to be submitted directly to An Bord Pleanala from early next year.
· The first tranche of 23 key strategic development sites in major urban areas with the capacity to deliver housing on a large scale, at multiple locations in the Greater Dublin, Cork City and Cork County metropolitan areas and at sites in Limerick and Galway, were announced last month.
· These 23 sites are capable of delivering up to 20,000 new homes in the medium term. They are being programme managed by the new Housing Delivery Office in my Department and will be exemplars for the coordination and delivery of plan-led housing development and active land management.
· I will also support local authorities to make more land available so that more homes can be built and the price of new homes comes down.
· The overall focus is on creating attractive places to live at affordable prices and rents. Private, rental and social housing will be designed and built together. The challenge here for local authorities, landowners and developers is to innovate and deliver quality product, at affordable prices and at scale.
Overcoming Infrastructural Deficits
· Infrastructural deficits have been identified, in consultation with industry, as one of the key barriers to development on housing sites.
· In order to quickly get key sites moving, Rebuilding Ireland has put in place a €200 million Local Infrastructure Housing Activation Fund, better known as LIHAF.
· This has the potential to open up lands and deliver housing of the order of 15,000 to 20,000 units by 2019.
· 21 local authorities have now sought LIHAF funding for 74 projects and these submissions are currently being assessed and evaluated.
· I will be announcing funding decisions in the coming weeks. Work on approved projects can therefore begin in early 2017.
· Separately, the NTMA and ISIF are currently exploring opportunities to support the delivery of housing-related enabling infrastructure in large-scale priority development areas with a view to kick starting the development process.
· The combined effect of these actions will reduce costs and yield housing at more affordable prices where it is greatly needed.
Rental Sector Strategy
· The Rental Sector Strategy, due for publication this month, will provide a road map for the development of a stable, strong and viable rental sector.
· The Strategy will be centred around the the four critical areas of security, supply, standards and services.
· Significant written submissions and feedback from the stakeholder consultation event held this October are being taken into account in shaping and finalising the Strategy.
Budget 2017
· The level of ambition evident across the five pillars of the Rebuilding Ireland Action Plan has been fully supported by Budget 2017.
· Existing funding streams have been increased and complemented by new funding streams yielding a comprehensive package of housing market supports.
· The tax rebate for first time buyers will be a game changer in stimulating the supply of new homes; it assists buyers in meeting their deposit requirements and gives confidence to builders that homes put on the market will sell. It turns potential and pent up demand into realisable demand and gives First Time Buyers hope again.
· Mortgage interest relief for existing homeowners has been extended, helping a group in Irish society that have suffered a lot in recent years.
· A number of important supply incentives for the rental sector include:
ü improvement in mortgage interest relief for landlords;
ü an increase in the ceiling for the rent-a-room scheme;
ü the extension of the Living City Initiative to rental properties; and,
ü supports for new student accommodation.
· All in all, the Government is allocating €1.3 billion to housing programmes next year, a transformational increase over 2016. This investment will see the housing needs of over 21,000 households being met in 2017.
· Ongoing support for the housing market will be kept under review during the lifetime of the Rebuilding Ireland Action Plan.
Utilising Existing Housing
· In tandem with accelerating the supply of private and social housing, a further key objective is to ensure that the existing housing stock is used to the maximum degree.
· A new Repair and Leasing Scheme will assist local authorities and approved housing bodies to bring vacant private houses into social housing use. Budgetary provision of €140m over the next five years is in place and has the potential to bring 3,500 vacant houses back into productive use between now and 2021.
· The Buy and Renew Scheme, with an initial capital provision of €25m for 2017, will enable local authorities and approved housing bodies to purchase private housing units in need of remediation, and renovate them for social housing use.
· Choice Based Lettings are a much more effective way for local authorities to allocate homes to people and families on the housing list. This is a great way to offer better choice and to minimise refusals.
Making it happen – Governance Arrangements
· Of course, a plan is only as good as its own implementation record.
· Implementation is being advanced across a number of Departments, under the oversight of a dedicated Cabinet Committee on Housing, chaired by An Taoiseach.
· I chair a top level Oversight Group of all the key delivery agents (both public and private sector) and in my Department an Implementation Board of senior officials, chaired by the Secretary General, monitors progress on a fortnightly basis.
· A dedicated Housing Delivery Office has also been established within my Department, to drive delivery of projects, particularly the large strategic sites, which are critical to the overall objective of increasing the supply housing.
· Staffed by experts in areas such as Project Management, Change Management, Planning, and Procurement, the Office brings a fresh perspective to accelerating housing delivery.
· A broader stakeholder forum is also being established and the representative bodies of those gathered here today will be further accommodated in this formation.
· Rebuilding Ireland contains a clear commitment to reporting regular progress, particularly through quarterly progress reports. The First Quarterly Progress Report was published on 1 November. You can find it and all other information on Rebuilding Ireland on the website www.rebuildingireland.ie.
Conclusions
· We are still in the early stages of the journey towards dealing with Ireland’s housing crisis but we have a clear understanding of the nature and scale of the problems we face and a clear plan of action to deal with them.
· Ultimately Rebuilding Ireland will be judged on its success or otherwise in increasing the supply of housing.
· You will appreciate, as I do, that the housing system is made up of a complicated set of moving parts whose relationships and inter-dependencies are variable at the best of times.
· All stakeholders have a shared responsibility for the housing challenges we face.
· Rebuilding Ireland, and the governance structures and reporting arrangements that flow from it, provide a context for open communication on addressing the housing challenges we face.
· I urge you all to continue to proactively engage with the Department and I on implementing the Action Plan.
· We have made a positive start and my Government colleagues and I are committed to moving forward with urgency, working together with all of the key stakeholders involved.
· We all owe it to the people of Ireland to ensure that it is successful and to be seen to be part of that success.
Thank you for time and attention.