I move:—
That the Dáil condemns the action of the Government in increasing the rate of interest to be charged in respect of advances made after the 8th October, 1952, under the Small Dwellings (Acquisition) Acts.
In the short time at our disposal here to-night I intend to concentrate on an urgent problem. The raising of the rate of interest to be charged in respect of advances under the Small Dwellings (Acquisition) Acts at this particular hour of the housing day is a matter of great seriousness to a lot of individual people, to our social position generally, to a considerable number of builders and to the building industry generally. That is a matter which will unfold itself in time, but at the present time there are a number of individuals and families in a grievous state of distress and in a very difficult financial position that will affect perhaps their whole future because of the suddenness with which they were advised that they will have to pay more for houses which they have engaged in setting up for themselves.
A very short look at the reports of the Department of Local Government published up to date show what the operation of the Small Dwellings Act has meant to our people and an important section of our people, the middle income classes, in recent years. In the year ending March, 1948, only 30 houses were built with the assistance of that Act; in 1949, 1,838 houses were built and in 1950, 1,915 houses were built. The further loans that were sanctioned to local authorities go from 28,000 in 1947 to 82,000 in 1948 and to 1,795,000 in 1949. While figures are not available for the number of houses built in 1951, if we relate to them the additional loans sanctioned by local authorities in the year ending March, 1950 we find that we must relate them to loans amounting to £2,520,000. If we wish to see the distribution of the work that is going on the figures in the report of the Department of Local Government for the years 1946-7, 1947-8, 1948-9 and 1949-50 show how widespread the situation is. Four local authorities looked for loans in 1946-7, nine in 1947-8, 34 in 1948-9 and 22 in 1949-50. When you consider that in the two years from 1948 to 1950, £4,300,000 was sanctioned for local authorities to assist people by loans to build their own houses you can see how widespead the whole situation is. There is not a county in the land which is not involved in loans sanctioned during the last two years. I speak of county councils and a very considerable number of urban councils.
The work going on is very widespread, therefore, and the matter is vital. It is a question of people building their own houses with a certain small amount of savings on their own part, a housing grant from the Government and a loan operated under the Small Dwellings Act. They are a class who could have no hope of getting houses under the Labourers Act or the Housing of the Working Class Act. They are an important class in the country and the work they have been doing for themselves, assisted by these loans, is one of the greatest factors in our welfare showing that our people are concentrating on saving for themselves in order to build up their homes and thereby strengthen our society. Whatever we will have to say later on in the weeks in front of us about the proposition as a whole, there are a certain number of individuals who, on the good faith of the local authorities and on the good faith of the Government, went to the cost of getting sites, making an arrangement with builders, having their houses built and committing themselves to loan payments for the future and they find themselves struck now, suddenly and unexpectedly, by higher interest charges which are going to cost them a very considerable amount.
Let us take one sample, Clonmel Borough. South Tipperary County Council is involved in it in a separate way and no doubt other Tipperary urban districts. The position in Clonmel, however, is that there are six cases where mortgages have been completed, both by the corporation and the borrowers. In these cases loans have been partially issued, leaving a sum of £5,345 due to be paid by the corporation to the individuals concerned as the work of construction of the houses progresses. In the second class, there are five cases where mortgages have been completed by the borrowers but were not completed by the corporation on the 6th October, the date on which the rate of interest was increased.
The total amount of loans in these cases amounts to £6,550. In the third class there are eight cases where applications were received by the corporation prior to the 6th October, 1952 and where the applications had been approved subject to title and other requirements of the Acts being in order. The total of loans in these cases amounts to £9,700. In the first of these classes, the six cases, the average increase in the weekly payment that these people will have to make for their house over the 35 year period will be 5/-. In the second class of five cases the average weekly increase will be 7/7 and in the third class of eight cases the average weekly increase will be 7/-. That is only taking an average but the fact is that in the case of a house where the loan is £1,500 a monthly increase of £1 17s. 6d. will have to be paid.
Anybody who has had any social experience and who realises the position of the type of family who are looking to build their own house will understand the circumstances in which they are, how much they are sacrificing and how much they are measuring their capacity to build a home before they take the plunge. Deputy Alderman Byrne gave a case the other night of young people who were going to get married. Having figured all their pence to see whether they could get a home at the terms of 3¾ per cent. they now find an impossible financial situation created for them and the various questions which arise for them were put by Deputy Byrne. In general, you have three categories: (1) young married people, (2) people intending to get married and who have been saving in order to purchase a home for themselves and (3) young people living in apartments or flats with their own people and who have taken their courage in their hands and asserted their faith in themselves and in the future by mortgaging their future to establish a home for themselves. These are types of people whom the State should encourage. In the past, the State deliberately set out to encourage those people with the result that, in two or three years, the number of houses increased in the way in which I have shown.
The Minister for Local Government said last week that the Deputies who spoke on this matter struck him as being more interested in hearing themselves talk than in listening to what he had to say. We are anxious to hear what he has to say. It is urgent that he should say what he has to say in a clearer fashion than he has done up to the present. He cannot avoid— without the Government's breaking faith with the people—meeting the cases of (1) those who in any way had their mortgages completed and accepted by the local authority, (2) those who had their mortgages completed but not yet accepted by the local authority, and (3) those who had received approval from a local authority of the proposal to go ahead with the project of building a house, subject to satisfactory title and other specified requirements.
It is imperative to relieve the anxieties and difficulties under which people are existing at present, and that the Minister for Finance will declare to-night that he will meet these three particular classes of people whom I have mentioned. It is imperative that he will go further and say that where persons had committed themselves with builders or in respect of the purchase of sites he will meet them at the old rate of interest. There was in existence a Transition Development Fund to help any housing carried out direct by local authorities. From the point of view of good faith, of ensuring that persons are not wronged and of safeguarding the building industry, it is imperative that the Minister will announce to-night that a Transition Development Fund will be set up to cover this matter.
The Minister for Local Government has indicated that he is inquiring into this matter. His statements, however, would not in any way indicate that he was gathering, in a detailed way, particulars of the types of cases that were involved. He seemed rather to be interested in the lump sum commitments of local authorities. In his answer to me to-day, in reply to a parliamentary question, there is one sentence which is disturbing. Part of his answer is as follows:—
"In notifying allocations of advances financed from the Local Loans Fund, some local authorities already make it clear to the borrowers that the rate of interest will be governed by that at which the amount of each advance was issued from the fund."
Then he adds:—
"It is desirable that this practice should be adopted generally."
It would seem that the Minister for Local Government agrees with the Minister for Finance that the last pound of flesh that the legal position allows the Minister to take from those who had entered into commitments will be taken.
There is one aspect of this situation that is really very confused and very disturbing. The Minister is aware that a very considerable amount of work is involved in getting the lease approved by the Minister and then stamped and registered. He is aware that no money is handed over by the local authority to the borrower—which means to the builder—until the builder has prepared and registered the lease in such a way that the property has passed from his hands. In many cases, perhaps in the majority of cases, the builder parts with his property before he gets the money. Frequently, the new tenant is in occupation of the house before the builder gets the money, paying to the builder a type of rent in lieu of interest. Therefore, at the present time, there are people living in houses who may not be able to sign the mortgages on these houses at the new rate of interest. A person who has borrowed £1,500 in respect of a house will have to pay, under the new rate of interest, an increase of £1 7s. 6d. per month or £22 10s. per year. Under present conditions, most people who build houses go beyond their resources in their belief in themselves and in their desire to have a roof over their head. They incur that obligation at, perhaps, a very difficult point in their ordinary married life and also in the financial side of their married life. The increase in the rate of interest will prove a crushing burden on those people. They may find themselves in occupation of a house which they are no longer able to retain. That creates a difficulty not only for them, but also for the builder. There are many builders who have parted with houses for which they have not been paid, and for which they now see little prospect of being paid. Such a builder must either put the people out of the house—that is, if he is still the owner of the house—or, if he has parted with his property to the owner, await payment of the money. Builders may even have to go to the High Court in order to get their property restored to them, if such a thing be possible. Therefore, not only is there a financial case to be made, but there are legal matters to be considered as well.
I understand that certain local authorities have advised people who are in the position that their arrangements are nearly completed that they must complete their mortgages within 14 days. I do not know whether that means 14 days from the other day or 14 days from the 8th October. Whether with or without the connivance of the Department of Local Government or of the Minister for Finance, local authorities, who have been dilatory in so many cases, are now pressing certain people to sign mortgages in respect of their houses within 14 days— mortgages for which they will have to pay the increased rate of interest.
Arising out of some of these complications, builders find themselves in a very difficult position. They will be in a very difficult position if the Minister does not change his whole approach to the rate he intends to charge under the Small Dwellings (Acquisition) Acts in future. At the present moment the people concerned are in distress. There are people who are tossing up in their minds whether they can afford to sign a document with which some local authorities are threatening to present them or whether they will forgo the moneys they have already paid for the site and the legal expenses they have incurred. These people are in a really shocking position. The evasive answers which the Minister for Local Government has given are unworthy of a Ministry that has any knowledge of the conditions of the people on whose behalf we are appealing or of a Ministry who is in touch with the situation at all. I, therefore, press urgently that the Minister should tell us to-night whether he is going to deal with the type of cases I mentioned in the manner desired, otherwise we shall have to press this motion to a division.
