Homes classified as “affordable” and provided through the new Land Development Agency (LDA) would cost some €320,000 in Dublin, Cork and Galway under current market prices, Minister for Housing Eoghan Murphy has said.

The development of the Central Mental Hospital in Dundrum will be one of the first projects to be undertaken by the new agency, which seeks to make State lands available for house building. It is envisaged that more than 1,500 homes will be built on the Dundrum site, with the first becoming available in 2020.

As well as Dundrum, sites in Balbriggan, Skerries and at the old Meath Hospital make up the initial sites to be used in the capital. Devoy Barracks in Naas, St Kevin’s Hospital in Cork, Columb Barracks in Mullingar and a site on the Dyke Road in Galway are also in the initial list, which will allow for the construction of 3,000 homes.

Ministers are expected to come forward with more potential sites in the coming weeks.

Some 30 areas in Dublin and 10 in Cork have also been identified as special regeneration areas which will see the agency build land banks for future residential developments.

The aim of the new agency is to provide 150,000 new homes over 20 years. Any developments built on State lands must have 30 per cent of affordable homes, in addition to the existing 10 per cent already needed for social housing. The target is to eventually have half of all such developments allocated for social and affordable homes.

Fianna Fáil, Sinn Féin and Labour have all said the requirements for social and affordable homes are too low. When deciding what an “affordable” home is, Mr Murphy said the criteria, including regional factors, to do so will change over the lifespan of the LDA, which will last for “decades”.

“If we look at Rebuilding Ireland, if we look at the affordable purchase scheme, they talk about an individual earning up to a maximum €50,000 or a couple earning up to €75,000.

“And then when we talk about house prices, we talk about €320,000 generally in the greater Dublin area, Cork and Galway and €250,000 in other parts of the country.”

Construction methods

Three methods of constructing houses on state State lands have been identified.

One is direct development by the LDA, which would be suitable for smaller projects of 250 units or less. Another is licence agreements, would see developers build on State lands under strict criteria, such as the types of homes, for example. This would be for small and medium-sized projects. Bigger projects could be undertaken as a joint venture between the State and large developers.

Using the Dundrum project as an example, Mr Murphy said the LDA would work with the Health Service Executive but would not buy the site and add “further fuel to the fire”.

Instead, it would help plan the site with the HSE and outline the criteria on housing types and other issues, such as affordability.

“And then the HSE can either go into a venture with someone else or licence or sell the land under those strict conditions and because we will have put all those things in place, the land will be worth more, we will be able to get even more of an affordability dividend for it,” Mr Murphy said.

The full establishment of the LDA will need legislation to be passed by the Oireachtas. Given the Government’s minority position, it would need the support of Opposition parties.

Fianna Fáil housing spokesman Darragh O’Brien said he was concerned about potential licensing or sale of State lands, and the “incredibly low” social and affordable housing provisions.

“My initial response is that I am underwhelmed. It falls way short and is going in the wrong direction”.

Sinn Féin’s Eoin Ó Broin said 60 per cent of homes on the lands would be sold at “at inflated, unaffordable market prices”.