DAIL DEBATE

Local Government Bill 1998

Mr. Kelleher: I wish to share my time with Deputy Batt O'Keeffe.

An Leas-Cheann Comhairle: Is that agreed? Agreed.

Mr. Kelleher: I welcome the initiative taken by the Government in commissioning and implementing the Bacon report. In recent years house prices have escalated beyond affordable rates for people on average industrial wages. This has been coupled with a shortage of development land, low interest rates and a booming economy. It has put huge pressure on people who wish to purchase their first house. This is why the Government's initiative is timely and welcome. It was necessary to commission a report to establish the best way to control escalating house prices. The Bill will enact the proposals of the Bacon report. The Bill is part of an overall package. The Minister for the Environment and Local Government has taken an initiative regarding the funding of infrastructure. Extra allocations will be made to local authorities for sewerage and water schemes to allow more land to be serviced and rezoned for development. Unfortunately, in recent years planners, county managers and those with executive powers in local authorities have not played their part in ensuring that enough land was rezoned for reasonable density housing to keep prices down. This happened in many parts of the country.

Mr. Higgins (Dublin West): There is plenty of land in Dublin.

Mr. Kelleher: In Cork, the corporation area is almost completely full.

Mr. Higgins (Dublin West): It is profiteering.

An Leas-Cheann Comhairle: Deputy Higgins, please allow Deputy Kelleher

to continue without interruption.

Mr. Higgins (Dublin West): It is racketeering.

Mr. Kelleher: On the periphery of the city where there are services, land has not yet been rezoned for high density housing. This is putting huge pressure on the market in Cork. In Dublin, irrespective of Deputy Higgins's comments, if private individuals own land, they have a right, which is enshrined in the Constitution, to sell it whenever and for as much as they wish. Incentives must be introduced to encourage them to sell the land to developers and builders to ensure affordable housing is available. I am confident the proposals in the Bill, in addition to the announcements of the Minister for the Environment and Local Government, will stabilise the escalating price of houses and ensure that people on low and middle incomes have an opportunity to purchase their first houses. County development plans are always contentious but planners and county managers have a moral obligation to ensure that young people and first time buyers can get into the housing market and purchase a decent house. This is the stumbling block at present. Regardless of the price of a house, unless one is trading up, it is impossible for people to get into the market. Another factor is the current high cost of rent. People cannot afford to save money for a deposit or take out an 80 per cent mortgage.

The banks also have a role to play. I am concerned because they appear to be dishing out money. Up to 95 per cent of the value of a house is readily available from banks if one shops round. This is also forcing up the price of housing. The banks have a duty and moral obligation to put in place a mechanism to ensure money is not so freely handed out because that adds momentum to house prices. The Bill has been broadly welcomed and I support the provisions announced by the Government regarding the implementation of the Bacon report. If action had not been taken there would have been problems in the near future regarding the national pay agreement. Inflationary pressures could have crept into the economy which would also have created difficulties in terms of reaching a new pay agreement. If these measures had not been introduced huge pressure would have been placed on public housing. This area must be examined because as house prices have increased, people have fallen back on public housing lists. Irrespective of how much money was allocated to local authorities, ultimately it would not have been possible to build the number of houses needed to accommodate everybody. The Bill is a proactive measure to ensure that house prices stabilise and people will have the opportunity to purchase their first homes.

Many people lobbied the Government with regard to rental income. The

position has been good for those involved in letting houses for the past number of years. As other Deputies said, Government policies and various tax incentives in the past encouraged this type of development. However, they were implemented to stimulate the building trade which was at a low ebb in the early 1990s and the economy in general. It was also considered at the time that they would provide affordable housing and rented accommodation for young people. However, the speculators again moved in and purchased large areas of designated land. They are now letting properties and reaping the dividends. This is the reason for the rental income aspects of the Bill. I am confident they will have a major impact on the affordability of rent.

Last year the health boards paid out approximately £90 million in rent and mortgage subsidies. A better system must be put in place because £90 million would build many houses. This matter must be examined to ensure the problems encountered by people on low incomes are addressed. Rent and mortgage subsidies benefit people who have five or six houses and the person who is renting the property will never get out of that trap. The public housing policy must be broadened. The money currently spent on rent and mortgage subsidies must be diverted towards the building of more public housing. In 1845 the population was eight million. It is now four million and it defies belief that people in certain parts of rural Ireland still cannot get planning permission. Planners, county managers and county councillors must assess this situation because villages and towns are being denuded of their people.

Section to follow:

Section HH follows.

Question Numbers:

Last Modified by: Phil Griffin at 13/05/98

07.24.15 p.m.

Previously modified by: Theresa McGowan, Aileen Fallon,

Phil Griffin

This is the 'EDITED' version of the transcript.

N.B. Corrections which Members desire to suggest should be clearly marked

on a print-out and the copy containing the corrections forwarded to the

Editor immediately.

Take Number: HH

Next Take Number: JJ

Forum

DÁIL ÉIREANN

Sitting Time

Sitting Date

16:50

13 May 1998

Text:

(Mr. Kelleher contg)I urge county managers, county councillors and planning officials to take escalating house prices into account. It is very difficult for people in rural Ireland to get sites to build on in their own areas, and this is putting pressure on schools, shops and the entire community structure. We will be judged on the effectiveness of this measure, which is an attempt by the Government to influence the market. It is positive and proactive and I hope it works. It has been welcomed by most people although it will have to be monitored closely. If it does not have the desired effect, the situation will have to be assessed again, but the problem has been acknowledged. An attempt has been made to implement the Bacon report proposals, though this Bill is only part of an overall package. I hope that over coming years those currently debarred from the housing market will be able to enter the market--

Mr. Higgins (Dublin West): How?

Mr. Kelleher: --and afford to purchase their first home. They can trade upwards later if they wish. Every Irish person wants to own his own home; we have the highest rate of home ownership in the EU and we have always nurtured home ownership. It has always been Fianna Fáil policy to assist first time buyers in purchasing their homes. We will continue to do so and I am confident that these measures, along with the proposals of the Minister for the Environment and Local Government will assist people in making their first house purchase.

Mr. B. O'Keeffe: I agree with Deputy Kelleher. There was a need to take action because house prices were spiralling out of control. My daughter is getting married and is trying to buy a house. House prices in my town range from approximately £75,000 to £120,000. It struck me that young people are in a straitjacket. Accordingly I welcome this Bill and the adoption, in principle, of the recommendations of the Bacon report. If one compares house prices today with those of five to ten years ago, the effect of our economic growth is clear. There was a time when tax incentives were introduced to generate house purchases and to ensure their were enough apartments and houses available to rent. However, time moves on and one must be concerned about inflationary pressures that are part of high house prices. The Government is addressing this. I have spoken to people in the property business, including one man who owns 35 houses. His attitude is that he had a great time and the gala is over, but that he is no longer interested in purchasing houses for rental purposes. This measure should stop the exceptional demand from investors, who should now get out of the market, albeit after a good innings. Large groups of investors buying blocs of apartments and houses meant there would be inflationary pressure on rents. Deputy Kelleher is right. The cost of rent supplement was £6 million in 1989; it is £96 million in 1998. How long can we pay such sums in rent supplement? Rents must be reduced.

This Bill gives the lie to the idea of overzoning. What a field day the press and the Left had in opposing rezoning. We were told there was no need for rezoning, but now everybody accepts that enough land has been zoned. We heard about brown paper bags, but the people now seen to have had foresight were councillors who read a demand for land and answered it, often against the wishes of their managers and planners. They saw a need for extra land and rezoned extra land. Now there is not enough land and we will have to examine the situation again.