Monday 26 September 2016

Noonan and Kelly clash over radical plan for housing

Daniel McConnell and Niall O'Connor

Published 09/10/2015 | 02:30

Environment Minister Alan Kelly
Environment Minister Alan Kelly
While there is a major gap between Mr Noonan and Mr Kelly on what plans finally go ahead, some package is expected to be signed off on Monday, in time for Budget day

Environment Minister Alan Kelly has clashed with Finance Minister Michael Noonan and his officials over his radical new plans for cheaper housing.

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Mr Kelly's proposals to offer sweeteners to developers and landlords was the subject of the most heated Budget discussions to date, the Irish Independent has learned.

As revealed yesterday, the plan will see developers compensated by the State in return for selling homes quickly, in large quantities and at below the market rate.

The plan centres on the fact that there are large-scale developers with significant pockets of land which have the potential to accelerate housing supply.

Developers who agree to sell homes at the discount will be compensated by a State scheme, which could cost as much as €180m.

Under Mr Kelly's plan, some 8,650 affordable homes in both Dublin and Cork will be unlocked by the end of 2017 at a cost of €180m to the taxpayer.

However, the proposals surrounding housing were the subject of robust exchanges at a meeting involving Taoiseach Enda Kenny, Mr Noonan, Mr Kelly and senior Government officials.

They met strong resistance from the Department of Finance and other Fine Gael ministers who expressed concern that the plan could "repeat many of the bad mistakes of the past".

"The Department of Finance was not enthusiastic about it, with strong concerns that it is a reward to developers," said one source.

Fine Gael ministers last night reacted with anger at Mr Kelly's "last-minute dropping" of the plan at Cabinet.

"It has certainly annoyed people, coming out of the blue like this. A lot of people on our side are scratching their heads," said one Fine Gael minister.

Another senior Government figure described Mr Kelly's plan as "silly".

But a source close to Mr Kelly denied that it was a last-minute addition, saying it had been worked on for almost six months. The source also said that there was a recognition that doing nothing was not an option. While there is a major gap between Mr Noonan and Mr Kelly on what plans finally go ahead, some package is expected to be signed off on Monday, in time for Budget day.

The second phase of Mr Kelly's housing plan, which relates to introducing rent certainty, is likely to secure agreement much earlier.

The measures include incentives for landlords who take tenants off the social housing list, as well as stricter rules surrounding the issue of eviction notices and rent hikes.

In relation to landlords, the plan proposes to provide tax reliefs to those who house low-income families for a minimum of five years. This is to address the crisis of landlords refusing those on rent supplement and other State benefits.

The incentives set to be offered include 100pc interest relief on borrowings for landlords who let for a minimum of five years to welfare recipients.

As previously revealed, rent prices will be linked to the rate of inflation in a bid to tackle spiralling accommodation costs. This will be in place until 2019.

Irish Independent

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