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Implementation of the Affordable Housing Initiative - Second Progress Report, January 2005

 

Summary

This Report sets out the significant progress that has been made in developing and progressing the Affordable Housing Initiative since my first report last June to the Parties to the Pay Agreement under the Mid-Term Review of the Sustaining Progress Agreement.

In June, I reported that the main elements of the overall scheme had been developed with the potential delivery of 6,100 housing units in prospect, and 24 sites having been assigned to the Initiative. 

Since then, I can now report that very significant progress has been made on the Affordable Housing Initiative. Government has agreed to the release of a further series of local authority/state lands, which together with the increase in Part V activity and the more efficient utilisation of the land already provided, has the potential to yield an additional 4,296 units. The total potential yield is now over 10,000 units, meeting the target proposed by the parties to the pay agreement.

The Affordable Housing Initiative is an injection of extra State resources, in the form of surplus or under-utilised, land. It has not and will not detract from the funding available for existing social and affordable housing programmes. The announcement last July on the release of State lands also included additional lands to be supplied for specific social housing purposes, such as the proposal for housing the elderly in Portlaoise.

Over 70 sites have now been assigned to the Initiative.

The Initiative is now on track to begin to deliver housing units with visible evidence of this delivery beginning in 2005. The key focus for the next phase of theI nitiative will be to significantly increase the affordable housing output through a combination of alternative fast-tracking strategies and proactive local authority management of those sites for which they have direct responsibility.

In this context the valuable site at Harcourt Terrace was brought to the market on the 17th of November 2004 as the first pilot for an exchange of completed (turnkey) housing units and/or zoned lands for housing. Initial feedback indicates that there is significant interest in this site. Other sites, particularly those in the Dublin area will also be brought to the market on this basis.

The Department of the Environment, Heritage & Local Government has been engaged in urgent discussions with a number of financial institutions to put together a package of measures, which will enable buyers to purchase affordable housing units by way of mortgage finance provided by the commercial lending agencies.

In this context, the recent announcement by Bank of Ireland of a new mortgage product designed in particular with affordable housing applicants in mind, is a very welcome development. I understand that the Bank has been engaged in extensive consultations with the Department of the Environment, Heritage and Local Government and a number of local authorities to ensure that the product meets the requirements of the various affordable schemes. The real value this product presents to first time buyers is in minimising the amount of deposit required. While some of the details remain to be ironed out this positive engagement from the financial sector is very welcome. I understand that the Educational Building Society has also been working closely with the Department of the Environment, Heritage and Local Government with a view to entering the affordable housing mortgage market. I would encourage other lending institutions to follow the lead of Bank of Ireland. This development complements the recent stamp duty changes, which could result in potential savings of  €9,000 and should help to make more readily available a largely untapped market to the first-time buyer.

The public investment in the Affordable Housing Schemes will besupported by legislation to give effect to a claw back arrangement designed to prevent profiteering, facilitate the direct sale of affordable units by the builder to persons nominated by the local authorities, and will also open up the affordable mortgage market to commercial lending agencies.

Now that all of the main components of the Initiative are inplace, a simple communications strategy aimed at those who are eligible needs to be brought forward as a priority. In the first instance this report and other guidance documentation are being made available on the Department of theEnvironment, Heritage and Local Government website. This central source of information will be continuously updated and linked to relevant local authority websites, which will identify access points and provide updated information at local level, aimed at potential beneficiaries.
 
My third report will monitor the effectiveness of the delivery mechanism using the local authority structure, alternative fast-tracking strategies, and the communications strategies being deployed both centrally and within each local authority structure. I will also be engaging with relevant bodies in relation to other direct costs incurred by affordable housing applicants, such as conveyancing costs.