Minister Murphy
Announces Housing Budget

 

  • €1.9billion – 46% increase in housing budget for 2018
  • Housing needs of 25,500  families to be met in 2018
  • €500million extra to support new target of 50,000 homes for those on social housing waiting lists
  • Targeting 3,000 exits from homelessness in 2018
  • Range of measures on vacancy including increase in Vacant Site Levy.
  • €75m for new affordable housing initiatives

 

Housing Delivery

  • In Budget 2018, the total funding provision of €1.9 billion is an increase of 46% over 2017 and it will allow us to meet the social housing needs of 25,500 households.   A large element – €1.14 billion – is for the delivery of almost 5,900 social homes through a range of construction (5,000) and acquisition (900) programmes.  
  • The balance of the funding will add additional tenancies – and maintain existing ones – through HAP, RAS and long-term leasing.  It will also fund other important housing supports and services in relation to homelessness, regeneration and programmes to upgrade existing housing (energy efficiency improvements, adaptation grants, housing for Travellers, pyrite, etc).
  • An allocation of €301 million (+€149m on 2017) for the Housing Assistance Payment which will enable a further 17,000 households to be accommodated, as well as support the 32,000 existing HAP tenancies.
  • Funding of €134 million will support a further 600 new transfers under the Rental Accommodation Scheme and also the ongoing cost of 19,900 households supported under the scheme;
  • The following is a breakdown of Social Housing Targets for 2018.

 

Delivery Method 2018 Targets
Build 4,969
Acquisitions 900
Long Term Leasing 2,000
RAS & HAP 17,600
Total 25,469

 

Addressing Homelessness

  • In relation to services for homelessness, an allocation of €116 million (+€18m on 2017) for Homelessness will address that the increased demand for emergency homeless services and will assist in supporting homeless households with long-term and sustainable housing solutions.
  • In 2018, more than 3,000 exits from emergency accommodation are expected through the provision of social homes and the Housing Assistance Payment.

 

  • Arising from the roll out of the Family Hub programme, which were allocated €45 million in 2017, the additional €18 million which is provided in 2018, will support the wrap around and running costs of the Hubs.  

 

Affordability

  • The Local Infrastructure Housing Activation Fund will be supported by an allocation of €60 million in 2018.  The Fund will provide enabling infrastructure on key sites to open up lands for early development and has the potential to release the delivery of at least 20,000 new homes by 2021.   At least 10% (or 2,000) of these new homes will be social housing (through Part V) with additional social housing to be provided on certain State-owned sites. The majority of the 34 sites being opened up will have a proportion of housing available at under €320,000 and bespoke arrangements on affordability are being reached in relation to the remaining sites to ensure a proportionate dividend for the public investment being made;
  • A second LIHAF infrastructure fund of €50m will unlock even more sites, more quickly, and at affordable prices.  Through a second tranche as well as targeting funding towards servicing local authorities sites that can be offered at nominal prices to AHBs to provide affordable housing are both clear examples of the Government’s focus on bridging the affordability gap for those that do not qualify for social housing supports but who are under pressure to find homes to rent or buy at their current income levels.  
  • In addition, €25 million is to be provided (€15m in 2018) to provide infrastructure and services (e.g. roads and paths, water connection, street lighting etc) on local authority-owned sites in Dublin to facilitate the delivery of affordable housing to help households facing the greatest challenge with affordability and to create mixed tenure communities;
  • Home Building Finance Ireland will provide finance at commercially competitive rates to developers with sites ready to go but who are experiencing difficulty in obtaining funding
  • Last week Minister Murphy announced a move to new planning guidelines to allow for more affordable apartment development for our city centres, like the removal of the car parking space requirement, a significant cost. 

Vacancy and Urban Renewal

  • Linked to the priority to bring vacant homes and derelict/under-used premises back into use, particularly in the centres of our cities and larger towns, a multi-annual urban renewal fund is being created, on a competitive bid basis with local authority contributions, to act as a catalyst, for local authorities, in partnership with other State organisations, local communities and the private sector. This programme will identify projects/initiatives to regenerate and revitalise depopulated urban areas and facilitate more compact and community-focused growth, as highlighted in the draft National Planning Framework. 
  • With €50m allocated over the four years to 2021 (€10m in 2018), and taking account of an additional minimum 20% contribution from LAs, the funding will be targeted at a number of local authority-led projects which will deliver on a number of key policies such as facilitating homes in existing buildings, in renovating derelict properties and improving the public realm through enhanced community amenities and services.  
  • Funding of €32 million has been earmarked in 2018 for the Repair and Leasing Scheme, with the potential to deliver 800 vacant properties for social housing;   Under the Buy and Renew and Repair and Lease Schemes, as well as the broader acquisitions programme being managed by the Housing Agency, we have funding available to see over 1,000 vacant homes being occupied by social housing recipients, as well as encouraging vacant property owners to renovate their properties for rental use, through for example HAP tenancies.
  • The vacant site levy will double to 7%. The 3% levy becomes a liability this January. If land owners on the register fail to build next year, then on 1 January 2019, their liability from that point on will increase to 7%. If they continue to hoard that land through 2019, then they will end up with an effective liability of 10% over 2018 and 2019 combined. 

Other important housing delivery and supports

  • Other important housing delivery and supports that will be funded through the increased resources under Budget 2018 include:
  • Funding of €12 million (+€3m on 2017) will support a range of Traveller specific accommodation schemes and deliver 110 homes in 2018;
  • €30 million (+€8m on 2017) will fund the remediation of a further 430 houses affected by pyrite;
  • A further 9,000 social homes will be improved through the energy efficiency programme in 2018 through funding of €25 million (+€3m on 2017);
  • €22 million (+€5m on 2017) will support the expansion of the Mortgage to Rent Scheme and will allow for a further 250 transactions under the AHB scheme;
  • Exchequer funding for housing adaptation grants will be increased to €53 million (+€5 million on 2017). This will enable up to 11,000 home adaptations to be undertaken facilitating people with disabilities and older people to continue to live in their own homes;

The National Regeneration programme will be supported through funding of €61 million (+€5m on 2017) targeting some of the country’s most disadvantaged communities;

  • Funding of €7.2 million (+€2m on 2017) will support the operational costs of the Housing Agency during 2018 and will ensure that the Agency is resourced to carry out its commitments under the Action Plan for Housing and Homelessness.
    • Very importantly, the Residential Tenancies Board will be supported through a provision of €7 million in 2018 (+€5m on 2017).  The increased funding reflects the expanded role of the agency and commitments under the Strategy for the Rental Sector, including increased rented accommodation inspections, which will ultimately facilitate a targeted annual inspection level of 25% of rented units by 2021, meaning all rental properties should be inspected once every 4 years.

Water Services

  • €170m is being provided in 2018.
  • €20m is being provided for the Rural Water Programme, which provides for increased investment in the rural water sector.
  • Funding is provided for the revenue shortfall from the suspension/abolition of domestic water charges. €114m of this cost is being provided in 2017 and 2018 through the Department’s Vote with the balance already reflected in the subvention provided through the Local Government Fund (some €239m is required on an annual basis to meet the abolition of water charges).
  • Funding is also provided to support initiatives on environmental and public health compliance in the water sector.

 

Statement from Eoghan Murphy, Minister for Housing,

Planning and Local Government

Budget 2018

 

Today is World Homeless Day, and today we have over 8,000 people who are homeless.

That’s not to say that they are sleeping out on the street every night. Thankfully we have emergency accommodation in place, with more coming, so nobody should be forced to sleep rough. And, the rate of homelessness in Ireland is low by international standards, which is a good thing.

But it’s also a good thing that, as a society, we believe that this still isn’t good enough. And that we demand of ourselves that we do more.

One family in emergency accommodation is one family too many.

We will be increasing our supports for the homeless next year, as well as our social housing tenancy supports. There will be a 35% increase on the current side of the Housing budget to over €760m.

  • The homeless budget will increase by €18m to €116m.
  • This doesn’t include the at least €50m to be delivered by Local Authorities and the HSE.
  • And it doesn’t include the Hubs programme – 6 new facilities to come on-line in the next two months with potential for more.
  • Resources will be provided to allow for more than 3,000 exits from homelessness in 2018.
  • The HAP budget will increase by €149m to €301m.
  • This will support a further 17,000 households to be accommodated.
  • In all, we will meet the housing needs of 25,500 new households on Local Authority waiting lists next year.
  • Put another way, every working day of the week, 98 new social housing households will be supported by the State in 2018.
  • And for those in mortgage arrears, we are providing an increase of €5m to expand the mortgage to rent scheme, increasing it to €22m in 2018, so that people can stay in their homes.

All of these resources will be directed alongside the new measures announced at the recent Housing Summit with local authority Chief Executives. For example,  the new inter-agency group to coordinate service delivery, the 200 additional emergency beds that will be in place by Christmas, the creation of exit coordinators, preventative measures like the roll-out of HAP place-finders nationwide, appointing a Housing First national director and a move to a ‘one refusal’ only policy.

In August, we saw near record levels of presentations of families in Dublin, but we also saw, for the first time in many months, a decline in the number of families staying in emergency accommodation in Dublin. This is welcome progress, slow but welcome. We can take our learning from Dublin and use that to tackle the growing number of homeless families outside of Dublin more quickly.

We have to be sensitive to the individual needs of families, some of which are more complex and require tailored solutions. Sometimes no matter what we do, it won’t be enough to help an individual beat the complex challenges they may find in their personal lives. But that doesn’t mean that we shouldn’t keep on trying.

I’d like to thank all those people whom are working on the front line, in local authorities and in the voluntary sector, to tackle this problem.

Building more homes, more quickly, at more affordable prices

While we must continue to deal with the immediate issue of homelessness, building more homes and using our existing stock of housing and land more efficiently is the ultimate solution.

We have a plan in Rebuilding Ireland and it is working. Since that plan was launched just over a year ago, planning permissions are up 49% and commencement notices are up 47%.  

Over the past number of months, we have brought about significant changes that will have a meaningful impact on the house building landscape, for example:

  • The entry in to force of the new An Bord Pleanala fast-track planning permission process in July,
  • Earlier this week I signed off on 18 of the 34 LIHAF infrastructure investment projects to open up new land banks and provide homes at affordable prices,
  • In September I announced a change in policy so that Local Authorities will move from buying to building new homes,
  • And, last week I signalled the removal of some key restrictions to apartment building, to make them more viable and affordable.

Today, the Government removes what it sees as the last significant obstacles to building more homes, more quickly, and at more affordable prices:

  • By investing more in direct house-building by the state,
  • By removing the Capital Gains Tax incentive to hold on to residential land,
  • By escalating penalties for land hoarding,
  • By introducing new affordability measures,
  • And, by providing a new, more affordable finance vehicle for builders up and down the country.

Build Programme

Next year the budget for housing in my Department will increase by 46% (or €600m) to €1.9bn.

That’s almost €2 billion directly aimed at our housing shortage & homelessness crisis.

On the Capital side, this represents an increase of 62% to €1.14bn – to build new homes.

The Government is also prioritising social housing as we look to the near horizon, with an additional capital allocation of €500m being made available out to 2021.

So what’s that going to allow us to do?  

  • 3,800 homes will be built directly by the state,
  • a further 1,200 will be Part V builds or rebuilt vacant homes,
  • 900 homes will be delivered through acquisitions
  • and a further 2,000 homes will be secured through long-term leasing arrangements.  (Total of 7,900).  

The remaining supports will be provided through the Housing Assistance Payment and the Rental Accommodation Scheme.

Looking out to 2021, the additional €500m of capital funding will allow us to increase the overall ambition of Rebuilding Ireland from 47,000 to 50,000 social housing homes, as recommended by the Cross-Party Special Oireachtas Housing Committee last year.  More than 30,000 of these will be directly built by the state.

Overall, the funding earmarked for the Rebuilding Ireland Action Plan is being increased from €5.35bn to over €6billion.

We must always produce a certain percentage of the total housing output in a given year, directly by the state. That way we can be confident of protecting our most vulnerable citizens, even in a future time of crisis.

Every new home built, to buy or to rent, or for social housing, takes pressure off another part of the system.

 

Vacancy

When it comes to vacant land that could be built on, we are going to more than double the vacant site levy to 7%.

The 3% levy becomes a liability this January. If land owners on the register fail to build next year, then on 1 January 2019, their liability from that point on will increase to 7%. If they continue to hoard that land through 2019, then they will end up with an effective liability of 10% over 2018 and 2019 combined.

Land owners have been given plenty of notice and still have the opportunity to avoid this levy by building homes on their land. 

Coupled with this, the change in relation to CGT that the Minister for Finance announced today is also important as it means that there’s no longer an incentive not to sell residential land or property. I’d like to thank him for taking this measure.

In terms of vacant housing, vacancy teams in the local authorities are working to identify vacancy hot-spots, with the cities due to report in a couple of weeks, and the rest of the country by December.  It is worth noting that the true level of vacant homes looks to be far lower than previously thought.

Nevertheless, the Minister for Finance’s announcement today in relation to tax deductibility for expenditure incurred in bringing a vacant home back in to use is welcome.  We are also looking at other measures, including some important changes to the Repair and Lease scheme, and these will be announced shortly under a vacant homes package.

 

Affordability

As we build more homes, we must ensure that new supply is delivered at more affordable prices.   We know that progress is being made when it comes to building more homes, but there’s a generation of people who are being locked out of the housing market, because they can’t afford to rent, or because their rent is so high they can’t afford to save to buy a home.

Some affordability measures are already underway and working well:

  • The rent caps introduced at the beginning of this year are working. If trends in Dublin continue for example, then rent increases this year will be below 4%. That’s a big drop on the more than 8% increases last year.
  • Where necessary, new areas will enter the rent pressure zones, like Drogheda and Greystones did at the end of Q2.
  • As indicated at the outset, earlier this week I gave the go-ahead for 18 of the 34 contracts to be completed under the LIHAF infrastructure fund.  This Fund will open up land banks to potentially support 20,000 new homes and on 70% of the sites involved, there will be homes coming in at prices below €320k.
  • And last week I announced a move to new planning guidelines to allow for more affordable apartment development for our city centres, like the removal of the car parking space requirement, a significant cost to development.

But we can do more, and we must.

Home Building Finance Ireland, the new entity announced by the Minister for Finance earlier today will provide finance at commercially competitive rates to developers with sites ready to go but who are experiencing difficulty in obtaining funding.

A second LIHAF infrastructure fund of €50m will unlock even more sites, more quickly, and at affordable prices.  As you know, LIHAF 1 was well over-subscribed, so we expect a second LIHAF call to be answered quickly.

Furthermore, a new fund of €25m will be provided (over 2018 and 2019) to unlock Local Authority owned land specifically to deliver affordable housing on those sites using models like co-operative housing which have already proven to be successful but are now needed at scale.  My Department is currently drawing up the criteria for access to this scheme, to be announced in the coming weeks, along with further affordability measures.

Conclusion

When it comes to housing there are of course additional resources for next year for a range of areas, like disability, the elderly, climate mitigation, traveller specific accommodation, pyrite remediation, and regeneration. I will elaborate on these further in the course of the Dail debate on the Budget.

Addressing our housing shortage and homelessness crisis is the Government’s number one priority. Budgeting is about choices and I believe we have made the right choices when it comes to increasing our state building programme, supporting homeless people, and ensuring that more homes can be built, more quickly and at more affordable prices.

I’d like to thank my government colleagues in the Independent Alliance for their constructive proposals, and Fianna Fail for their constructive engagement.