Matt Shanahan urges VAT relief, backs SHD repeal and local control

I am pleased to take part in this debate today, which is largely about amending large-scale residential planning and development and hopefully what you are proposing will streamline now and speed up the planning process which is required to impact the present lack of supply of starter homes in the country. I welcome your decision to dispense with the strategic housing development policy. I think certainly, as you know, Minister, in regional towns and villages, where schemes were applied for, some of the configurations are largely unworkable in market terms for many developers and certainly for homebuyers. In my own city of Watford, I can think of two schemes which applied under the SHD where the density guidelines bear no relation to what buyers were seeking, no relation to our previous draft development plan or approved development plan, and where the subsequent high-density schemes approved would find no first-time buyer demand and buyer demand, and not even demand from property REITs or property investors. I would raise the issue that others have raised with you regarding the timeline to dispense with SHDs and the process. You have allowed a significant window, it appears, for pending applications for those who even wish to make new applications. I am just wondering, given that decision, have you considered any review process over the coming number of weeks, Minister? I welcome also the greater influence this bill will give to local authority decision-making. I think this is a good thing. I hope that council executives now will listen, and their planners, carefully to the views expressed by local authority, city and county councillors, who know more about the housing demands on the ground than even the planning departments do. Certainly, they are speaking to constituents every day, and they have a very good feel for where local authority development should point to in the future. I welcome also your announcement of a two-stage pre-application process. I think this will, as you have highlighted, allow for greater transparency before any formal application planning is made. I hope and welcome the proposed reference timelines for application considerations and for the granting of appeals. I see that you are putting potentially tariffs on not alone the local authority, but on the developers. It would be my experience in the main minister that these delays are largely at local authority level, not with the developers, but we will see how that goes. I think your decision also to propose to increase the 30 per cent commercial floor cap on large strategic housing developments or residential developments is probably a positive thing in terms of the viability and financing of those. All in all, I think the bill has merits, and it appears in terms of streamlining the application process to large-scale residential developments should be a positive thing. Hopefully, it will give back greater powers to the local authority to be actively involved again in planning considerations and design alterations. Can I speak, Minister, to something beyond your bill, which is essentially some of the issues that I believe are presently impacting the housing sector and the housing supply. Some of these have been touched on already by a number of deputies. But affordability is becoming now really a key obstacle to people owning their own home, be it a first-time home or a second-hand home purchase. I would point out to you, Minister, and I think we have had this conversation offline, the VAT rate of 13 per cent on a new home builder, on a starter home, any home in fact that is going to be built. When you take the roll-up of mortgage costs on top of that, Minister, that is a net cost of about 17 per cent over the life of the bill to the person who is buying. We are trying to give supports to first-time buyers. Would you not look at some form of VAT rebate to first-time buyers and give it even a year or two years after the fact that they can short-term finance it so that that price would not reflect in the sale price and the developers would not be taking that. But we are taking a huge lump, somewhere north of 30 per cent has been taken out in government tariffs and development fees and levies of all new house bills. This is a huge amount of money to first-time buyers when the affordability component is becoming now so difficult. Another area, and I have mentioned this to you before, is the cost of house building materials. In this country they are probably somewhere between 20 and 30 per cent more expensive than they are on the European market. And how is it that as members of the EU, and hopefully with open borders and all the rest of it, that we should have fairly equal prices in terms of building materials, but that is not the case. And I think I said to you before that you can go to Poland at the moment and load up a container there, leaving out your container costs to ship and land materials in here up to 30 per cent less. And surely, Minister, we need to do something to have a look at are there cartels happening in the building materials space? Are there anti-competitive practices happening that are sustaining these high materials costs? I understand that we have a very large demand, I understand that the supply chain has been interrupted with Covid and all of that. But despite all of that, there is very significant what I would call price gouging going on in the marketplace at the present time. Another issue I would point out to you, Minister, is the issue of rural density and one-off housing. I know yourself and the planning regulator have probably shared a different position on this publicly, but I still think you need to clarify exactly what is the position now in terms of future rural one-off housing. And we are talking about trying to retain and develop and sustain rural communities. And at the same time, we are giving the message to people now that if you have access to land in the rural community, if you are maybe a son of a daughter of a farmer, but you do not have an actual relationship with the land. In other words, you are not getting your livelihood from the land, but you might be living in the community that you are not entitled to a house build. And some of those farmers might have 10, 20 acres, and those people are the lives of future communities. I do not think it is fair to be pushing them into areas that they are not from and forcing them into potentially high-density builds in other rural villages. So I would ask you, Minister, can you give some clarification to councillors around the country as to where you are thinking falls with this? Another area that I think government has not done enough on is in the area of developer finance. And it is only a matter of speaking to developers to understand the difficulties that they are having in terms of getting build finance. And the strictures that are put on them in terms of borrowing large amounts of money. And one of those is the 30-30-30 rule, whereby you will go into one of the pillar banks and say you want to borrow money. And they will tell you, well, we will give you money for one third of the development. And you can develop that and sell the houses. And when you have washed it all out and everybody has been paid, we will then go on to give you the next 30 and the subsequent 30 percent or 33. And the problem with all of this is that building development does not work efficiently in that way. If you go into a large-scale building site, you want to bring all of your people, all of your materials, everything onto site and you want to build without interruption. That is where efficiency is. So I think we have not done enough in terms of trying to firstly stimulate the banks. And secondly, Minister, I might say to you, there are a number of large-scale developers in this country who are giving building finance to smaller developers, simply because firstly they understand the marketplace and secondly they are prepared to risk money that the pillar banks are not. But that is also putting a cost onto the end product. And again, I say this is something that, you know, maybe some financial instruments or otherwise, but certainly there must be some way of interdicting this activity. Beyond that, I think something we are all aware of, which is the funding of Irish water. And many potential housing application schemes are not feasible in large degree because of the costs of accessing rural and wastewater treatment facilities. And developers are being levied with these costs. And I said to you some time ago, Minister, about a housing development in Waterford, where the developer was being asked to pay the full cost of an upgrade of sewage ducting into a scheme, where further schemes were going to follow on. But there was no amortisation for the schemes that were to follow. He was to pay it all upfront and anybody else who came in after was going to benefit. That is not sustainable, but to my knowledge that has not been yet addressed. No problem. So I think again, Minister, I would ask our ministers, I would ask you to please look at this. The adequate and proper funding of Irish water is a significant disruption at the moment to the development of housing in this country, and particularly to smaller scale rural developments. Another area which has been touched on before is the availability of skills, particularly the wet skills, block laying and plastering. I am on the Enterprise Committee and we are talking now about trying to extend out work permits for people with these trades from Europe, despite the fact that COVID restrictions aside, we nearly have full employment in the construction sector. We cannot get people into these skills, we cannot get people who have left them back to work, and we do not seem to have an avenue on which to coax them other than talking about apprenticeships. The problem with apprenticeships at the moment is there is no good message about apprenticeships in the construction sector, despite the fact that if you are a block layer today, you might earn up to €2 per block, and you might lay between 200, 300, 400 blocks for a really experienced block layer in a day. So there is very good income to be had, and yet parents are telling their children, go to college, get a low level degree, which is going to qualify them for what? Further low level employment into the future. I think we have to recognise now and start a communications programme about construction as a very valid, employable employment sector. in this country. And if we go right across Europe and into the States, construction has always been a really good sector to work in. But for some reason in Ireland, over the last number of years, we have failed to convince youth that this is an area of opportunity that they should explore. So I think the Department needs to consider a formula also to get all the utilities and regulators together to streamline the combined activities in terms of home delivery. And if you are a builder at the moment, you have got to engage with Irish Water, ESB, SEAI, Home Bond, and a whole plethora of other agencies and professionals. And each one you are depending on a licence application or a regulation approval before you can go on to the next one. And this is extending out the whole delivery timeline. It is adding costs to the developer, which he or she is subsequently passing on to the home buyer. And at the moment, this requirement of one certificate has to come before another is absolutely throttling the provision of housing. So something has to be done here, Minister, in terms of this. These are simple processes and we are killing ourselves as usual in this country with regulation. So builders are being inundated with problems like these, as I say, all of this regulation, the lack of funding. I spoke to a property developer today who tells me he has to purchase land four years in advance of future housing schemes that he wants to come on. Yes, get the purchase and the legals out of the way, the financing, make the planning application, get the finance in place, build the houses, get them sold. It is a pretty easy process to understand, but the timeline is the problem and we are doing nothing to try and short-circuit that or to try and refine it to any degree. So I welcome in broad measure what the Minister has announced here in terms of these large-scale residential developments. I still think there are other things that we could be doing to try and help particularly the smaller builders. And one final thing I would say, Minister, and I know this has been touched on in the Finance Committee, that we have to find a way to stop. And stop is the wrong word because it is a free market. But I am aware in Waterford at the moment where investment money is coming in at the moment and is buying houses as they come up in the second-hand market. And people are being priced out of the market. They have no way to compete with that type of money. I do not know how we solve that problem, but it is a problem that we do have to solve. We cannot, we were 150 years ago, a nation of people who paid tenancy, paid tenants' monies. All our lives, all our ancestors paid for it. We never owned our own property. In the last 50 years we have come to property ownership. And now again we are going to have absentee landlords throughout the EU and the US. And we must do something to stop this. At the end of the day, a person's home is their castle. I believe it is their right to own property in this country. And I think we need to do more to see that that happens. Care market here. Thank you. Thank you. Thank you. You