Dáil Éireann debate -
Wednesday, 5 Jun 1957

Vol. 162 No. 3

Small Dwellings Acquisition Bill, 1957—Second Stage.

Minister for Local Government (Mr. Smith)

I move that the Bill be now read a Second Time. The maximum advance which a local authority may make under the Small Dwellings Acquisition Acts is 95 per cent. of the market value of the house excluding from that market value a grant under any enactment. The advance may not exceed £1,800 in Dublin City and County, the borough of Dún Laoghaire, Cork City and certain parts of Cork County adjoining the city. Elsewhere, the advance may not exceed £1,600.

It has been urged by house builders for some time past that the statutory definition of market value for the purposes of the Acts does not permit of an adequate market value being assessed for new houses having regard to current costs. The definition is contained in paragraph (a) Section 32 of the Housing (Amendment) Act, 1950, and reads as follows:—

"In the case of a house occupied or to be occupied for the first time, the amount which, in the opinion of the local authority, represents the reasonable cost of building the house, including so much, if any, of the legal and other expenses incidental thereto or to the acquisition of the tenement upon which the house is built or to be built, as the local authority may consider proper, but not including any fine, premium or other consideration for the acquisition of the leasehold interest in such tenement."

Builders have contended that market value should include all such factors as profit, cost of developing the site, of constructing roads, footpaths and sewers, of providing watermains and public lighting, and of carrying out all additional works required from time to time by local authorities; all fees, expenses and overheads and the acquisition of the site on which the house is built or to be built. It has further been contended that there should be some form of appeal against the decision of a local authority in the assessment of market value.

These representations were considered by the previous Government and on 24th December, 1956, local authorities were informed that legislalation would be introduced to amend the present definition of market value on the lines of the proposals now before the House. Local authorities were requested to operate the Acts in accordance with the revised definition proposed and it was indicated that legislation would validate any action on these lines taken in anticipation of the enactment of this Bill. The Bill does not propose any amendment of the law governing the proportion of market value which may be advanced.

Section 1 of the Bill tries to ensure that all the normal costs and charges falling on an individual building or buying a new house, including the value of his interest in the site, may, if reasonable, be included by the local authority in its assessment of market value for the purpose of an advance under the Acts. The section retains the principle that it is the opinion of the local authority on these factors which will determine market value. The revised definition seems to have the acceptance of local authorities and builders.

Sub-section (2) of the same section is intended to validate any determinations of market value made since 24th December, 1956, on the revised basis, in accordance with the request to local authorities to which I have referred.

The second section of the Bill provides a means of independent check on any dispute as to market value of a new house which may arise between a local authority and a builder or a person seeking an advance under the Acts. Under the section, an application may be made to the Commissioner of Valuation, by a person who contends that the local authority might properly have indicated a greater amount by way of market value. It is not proposed that the opinion given by the commissioner on the market value of a house would commit the local authority to making any advance or to making a particular amount of advance in any individual case. The local authority would retain complete discretion in these matters.

The person applying to the Commissioner of Valuation must pay the fee which will be prescribed by regulations made by the Minister for Finance. These regulations will be laid before each House of the Oireachtas in accordance with sub-section (7) of Section 2.

The primary purpose of the Bill is, as I have shown, to remove a difficulty of interpretation of the law which has existed for some time between certain builders and local authorities in the Dublin area. There are other and perhaps more important aspects of housing which must await review on an appropriate occasion.

Mr. O'Donnell

We on this side of the House welcome the Bill. As the Minister has very fairly pointed out, this is a Bill to implement a decision and an undertaking given by the previous Government. We gave this undertaking to local authorities in the month of December last year and we undertook, if we remained in office, to introduce the Bill which the Minister has now brought before the House.

As he has pointed out, it is merely to clarify the interpretation of the law so far as market value is concerned. There is one question I should like to ask in regard to the Bill. When the Government decided to take this action last December it was decided to amend Section 32 of the Housing Act of 1950 by substituting paragraph (a), which is in the present Bill, and (b):—

"In the case of a house occupied or to be occupied, where the house is constructed by the person to whom the advance is made for the first time, the amount which, in the opinion of the local authority, represents the reasonable cost including all reasonable incidental expenses of providing the house ..."

In the present Bill it says "of building the house". I should like to know from the Minister is there any reason for the change from "providing the house" as intended by the previous Government, and his amendment now, "of building the house". Perhaps the Minister in replying would clarify that position. That is really all I have to say on the Bill.

Mr. Smith

I understand that alteration has been made on the advice of the draftsman.

Mr. O'Donnell

That is satisfactory.

Mr. Gallagher

In Section 1 of this Bill it appears that the ultimate success of the Bill will depend to some extent on the interpretation by the local authorities of the words "reasonable cost," including "all reasonable incidental expenses" and "all reasonable expenses incidental to the acquisition of the site". I think that is most important when one comes to discuss the Bill. It could be contended, and it is likely to be contended by builders, that administrative costs, advertising costs, and commission to agents for selling the houses, should be considered as reasonable costs.

To my mind, the only items that should be considered when assessing market value should be the cost of acquisition and development of the site, the legal and architects' fees and the cost of building the house. I am perfectly satisfied that should be the interpretation put on the section by the local authorities. The cost of acquisition and development comes into it also because the local authority must make sure that no fancy prices are paid for acquisition and that development costs will not be increased by antiquated methods of developing the site. All these things should be taken into account by local authorities and I am sure the Minister and his officials are aware of that.

Sub-section (2) of Section 2 states:—

Where an amount has been indicated to a person by a local authority ..."

I would like it made clear to what person this will be indicated because there must be clarification of it. Will it be indicated to the builder or the purchaser of the house, or to the auctioneer? It is not quite clear if we simply say the amount will be indicated to a person by a local authority. I assume it is to the purchaser of the house, but it should be made clear that it is the purchaser because if not, you will have local authorities pestered by the builders asking: "How is Mr. So and So's loan going?" Again you may have the auctioneers wanting to know how such and such a case is going. To my mind the local authority should not discuss anybody's business except with the person concerned. If a person applies for a loan only that person and nobody else should know how the application is progressing and the local authority should not be pestered as they have been in the past.

Mr. McQuillan

What about the local representatives?

Mr. Gallagher

I agree it should not be told to local representatives either because certainly that is a matter between the applicant and the local authority.

The amount should be indicated to the person who is purchasing the house and nobody else, because in the long run it is he who has to pay for the house and not the builder. The builder loses interest completely once he has sold the house and it has been passed and approved by the local authority.

I think there is a reason for this, but it should be made quite clear. The object of Section 2 of the Bill is to provide potential purchasers with the right of appeal against the decision of the local authority on the amount which the local authority claim is the proper market value of the house for the purpose of the granting of a loan. The idea behind this is quite a good one, but the more one studies this section the more one becomes convinced there is very little incentive offered to a potential purchaser to go ahead with an appeal—to go to the trouble of paying the fee, whatever it will be and, possibly with the aid of the builder, of employing senior and junior counsel to follow the matter up. At the end he might find that it is the local authority who have the final word.

Under the Bill it seems that the local authority can completely ignore the decision of the Commissioners of Valuation. If the commissioners decide against the local authority and in favour of the applicant the local authority may ignore that decision. After the appellant has gone to all the trouble of preparing the appeal, of incurring the expense of the appeal and of waiting for a decision from the Valuation Office, the local authority may ignore the commissioners' decision and still say "no". There is no great incentive in that.

I agree that the local authority, who are providing the money, should have the last say in the matter; they should see to it that the money they are giving out is based on the proper market value of the house. However, I think it should be made quite clear to the potential purchaser that, no matter how his appeal goes, the local authority may, in the long run, say "no". I feel it would be much better if it were possible for the local authority at the outset to consent to the making of an appeal. Then when the appeal is heard by the Commissioners of Valuation, the local authority, having consented, must abide by the commissioners' decision. It would give the potential purchaser a better chance; he would know at the beginning that he had a chance in his appeal. It would be much better for him to know at the beginning that he had a chance rather than that he should find out, having gone to the trouble and expense of appealing and having awaited the decision, that he had no chance from the beginning.

We know that in most of these cases it is the builder, possibly a strong firm of builders, who will appoint eminent senior and junior counsel to fight the cases. No matter what they do in this respect, and no matter how successful the appeal may be, the final decision rests with the local authority. As I have said, it would be advisable that the appeal would be made by agreement between the local authority and the other party. It would provide a much greater incentive to potential purchasers if the local authority were agreeable to abide by the commissioners' decision.

I trust that the Bill will work as well as the Minister and his predecessor seem to hope. I believe there is some hope for it if there can be some way of getting the local authorities to decide what the reasonable cost of a building is and if, in the matter of appeals, the local authorities are able to follow the line I have suggested. I hope the Minister will look into the points I have made.

Mr. Larkin

I have one main comment to make. I believe one of the difficulties under previous legislation was the interpretation of this term "market value". The market value, according to the interpretation of the ordinary layman, is the cost at which one can purchase an article in the open market. Obviously, when it comes to the question of fixing the amount of the loan to be made to people desirous of building houses under present circumstances, it would possibly mean that very few houses would be built if we applied the ordinary meaning of the words "market value".

The Bill proposed by the previous Minister and introduced by the present Minister appears to be mainly for the purpose of fixing the interpretation of these words. The Bill also endeavours to make it possible for local authorities to make loans available and to encourage and assist people desirous of building their own houses. My own feeling in the matter, purely one of mental reservation, is whether it would not be possible to devise a simpler formula than that now presented to us. The formula now before us may in itself give rise to many difficulties. At one stage there was no trouble as far as Dublin was concerned; there was no great misunderstanding about what was the reasonable cost of building a house.

While we all welcome the Bill, if the effect of it is to make the issuing of loans to those desirous of building a house easier and simpler, and to make it possible for house building under the S.D.A. to proceed at a much more accelerated pace, I do think the method of dealing with the situation will not make it more simple. In connection with the matter of appeals to the Commissioner of Valuation, and I am somewhat in agreement with Deputy Gallagher on this, it does appear rather strange that you deliberately provide for a system in which an applicant can appeal against a decision made, and then you still reserve the right for the person or the body who originally made the decision to override the appeal in the second case.

It appears that it would be more to the advantage of the local authorities and to the advantage of the builders or those applying for loans, if the system of decision in this matter could be by way of agreed arbitration. If an appeal is made against the valuation it appears to be reasonable and logical that, if the appeal is allowed, the local authority at that stage should not come along and say "We are now standing on our original position". Though the applicant has gone to the trouble of going through the machinery of making the appeal, the position then would be just as it was in the beginning.

I would ask the Minister to consider these two points. In regard to the first point made by me I do not think at this stage there is any chance of an alteration and, if a question of reconsideration of the whole matter would involve any delay at all, none of us would be in favour of that. However, I do think the Minister should reconsider now or at some future time whether or not a much more simple formula might not be devised, instead of this rather difficult and rather involved procedure of saying that loans may be advanced on the market value and then having to go to a great deal of trouble to outline what is meant by market value. What is meant by the market value for the purposes of this Bill is not what I consider to be the meaning of the words "market value" in relation to anything else. If one goes into a shop to buy a suit of clothes or any other article, one will pay what may be a market value—whatever the business at the time will bear—but there is no intention to have these loans related in that particular way.

I think the intention of the Minister and of his predecessor is to encourage housebuilding under the S.D.A. and to make the situation simpler. I trust the present Bill will ease the immediate situation, but from the long-term point of view I think it is not the happiest way of going about it.

Mr. Briscoe

My approach to this Bill is, in the first place, to express my satisfaction that it is being introduced. It is, of course, only one of a number of items that have been discussed in the past in connection with the slowing down of building under the S.D.A. Acts. As I understand it, this Bill is the result of a conference between the master builders and the last Government and it expresses, as far as I can understand, the wishes of the master builders to eliminate what was previously the most unsatisfactory position that had arisen due to the interpretation, in pounds, shillings and pence, of the market value of a house.

I read this Bill very carefully. I discussed it with certain of the officials of the local authority in Dublin and I have also discussed it with representatives of the master builders' association. It appears to me, generally speaking, to be satisfactory. It will mean further discussion between the master builders and the local authorities to iron out a final formula as to how it is to be operated. I am assured it is satisfactory as far as the master builders in Dublin, on the one hand, and the local authority in Dublin, on the other hand, are concerned. I do not see there is any great problem.

This, together with the recent announcement of the Government in regard to raising the minimum income level of individuals now permitted to apply for S.D.A. loans, and the availability of money from the local authorities will restore somewhat the prosperity of the building industry. It will begin to make available a more reasonable number of houses for those who wish to have houses built for themselves for acquisition under the S.D.A. Acts.

I have listened carefully to Deputy Gallagher and to Deputy Larkin. I was not here when the Minister made his introductory speech but I was able to read a copy of it and I am satisfied that this Bill, which was promised by the last Government, should have been introduced earlier were it not for a certain event taking place. I still hope the Minister will be given all stages of this Bill to-day, so that even with the retrospective references in the Bill and in the Minister's statement, it will be speedily passed into law. I welcome the Bill.

Mr. O'Malley

Like the previous speakers, I think this Bill is long overdue. Those of us who are conversant with the Housing (Amendment) Act, 1956, are well aware of the injustice which Section 19 of that Act and the interpretation of it caused, particularly in the City of Dublin. I freely confess that it gave no difficulty to local authorities outside of Dublin. They continued to operate the S.D.A. Acts as they had done before the introduction of the Housing (Amendment) Act, 1956. When Section 19 of that Act came into force we saw that the great objection in Dublin to it was that a Dublin purchaser had to find £220 or £230 in contrast to a man who would nermally have to put down only £80 or £90.

I had hoped that we would have had from the Minister a consolidating Bill on housing, dealing with all these matters, but I appreciate that would take time. This removal of this injustice, and the manner in which it is being removed, is possibly the best thing that could be done under the circumstances. We all know the S.D.A. goes back to 1899 and, in the light of experience gained in its operation, there are very many improvements which still remain to be made with regard to the administration of the S.D.A. generally.

Like previous speakers, I am not convinced of the reason why the Minister has not made it mandatory, statutory or obligatory on local authorities to implement the findings of the Commissioner of Valuation. The Minister has not given any reason why the findings of the commissioner are not being implemented; the local authority can dig its heels in and he "doggo." I do not see any provision in this measure whereby, the local authority holding out against the findings of the commissioner, an appeal can be made direct to the Minister for his final decision. I think such a provision is vitally necessary. Otherwise delaying tactics will again be the order of the day.

There is another point which is not appreciated. A master builder or a private builder may submit a scheme of houses to a local authority. He is then entitled to obtain from that local authority the market value of the houses. If that is the position, so much the better because it means that each individual purchaser will not have to depend on the amount of the loan that will be granted to him. Now, suppose a scheme of 20 houses is submitted to a local authority, it can be established immediately what loan will be given subject to—I think I am correct in this—the local authority being satisfied that the applicant is capable of repaying the loan. The only occasion on which an appeal will be made to the Commissioners of Valuation will be in the case of a person whose income might be somewhat low under the new limits. A decision might be taken to grant £1,400 on all these houses but, in a particular instance, the local authority might decide that because the applicant's income is so much the applicant could only be paid a loan of £1,200 or £1,250. My interpretation of this section is that an appeal can then be made by the applicant.

Deputy Briscoe has suggested that the Minister be given all stages to-day. I suggest to the Minister that there is a flaw in Section 2, namely, that if the applicant does not get a sufficient loan he can appeal to the Commissioners of Valuation but there is no proviso, good, bad or indifferent, whereby the builder can appeal against the decision of the local authority in relation to market value.

Mr. O'Donnell

That is the sole purpose of the section.

Mr. O'Malley

The sole purpose of the section is, on my interpretation, that the aggrieved person—and in this case the aggrieved person is the person who will occupy the house—can appeal. The builder of the houses cannot appeal against market value as established by the local authority. He must wait for each individual applicant to come along and that is where the flaw lies. In my opinion it is a bad flaw and it should be remedied now. The sub-section reads:—

"Where an amount has been indicated to a person by a local authority under paragraph (a) of Section 32 of the Housing (Amendment) Act, 1950, (No. 25 of 1950), as amended by Section 1 of this Act, and that person contends that a greater amount might properly have been indicated, that person may, on payment of the prescribed fee, submit his contention for consideration by the commissioner."

Mr. Gallagher

One could claim that that was negative.

Mr. O'Malley

That is the whole point. I was one of the severest critics of Deputy O'Donnell when he was Minister for Local Government and I think I was justified in my criticism of him. But credit where credit is due —he did one good thing—he provided that the builder could himself be paid the Government grant direct under the Act of 1956. That provision meant a saving on administrative costs and so forth. There have been cases where individuals, when they got the grants, refused to part with them to the unfortunate contractor for some reason or other. The provision introduced by Deputy O'Donnell was a welcome one but, in order to be consistent now, there should be provision in Section 2 of this Bill enabling the contractor to appeal to the Commissioner of Valuation.

Mr. Smith

Where does it say that he cannot?

Mr. O'Malley

My interpretation is that only the applicant for a loan can apply. Sub-section (2) reads:—

"Where an amount has been indicated to a person by a local authority under paragraph (a) of Section 32 of the Housing (Amendment) Act, 1950...."

and Section 32 of the 1950 Act stipulates:—

"In the case of a house occupied or to be occupied for the first time, the amount which, in the opinion of the local authority, represents the reasonable cost of building, etc., etc."

How can a builder live in 20 houses unless he sleeps in each one on 20 consecutive nights? If my argument or submission is fallacious, that is an end of it, and the Minister can say so when he is replying.

There is another point which evidently has caused some concern to these builders. Could the Minister say that if a house is under 1,400 square feet and it is valued by the local authority at £3,000 or £4,000 that such a house qualifies for a loan under the S.D.A. Acts? The trouble nowadays is that all the encouragement is given for the building of three-bedroomed houses, that is two large rooms and a smaller room, possibly under 1,400 square feet, the statutory limit to qualify for the Government grant. However, for very large families and for newlyweds starting off and intending to spend all their days in this house which they have purchased it should be possible to make provision whereby the upper limit, if there is an upper limit, for the obtaining of a loan could be raised. I am not talking about the £1,800. I would make it permissible for the local authority in certain areas, say, Dublin and Cork, to give £1,800. I do not want them to give £2,000. I am satisfied with that figure. I want to know are they debarred from giving an S.D.A. loan if in their opinion a house is valued at more than £2,000? If they are debarred from giving a loan on a house valued at, say, £2,500, that will have to be remedied very quickly as we all know that building costs have risen. You would then be encouraging the speculative builders and they are the people who are giving the most employment.

Yesterday on the Estimate for the Minister's Department I pointed out where town planning was leading us. You can see all around Dublin that everything is treated from a suburban standpoint—three pairs of semidetached houses and terraces of six to eight houses. There is quite an appreciable market, if encouragement is given, whereby the more expensive type of house can qualify for the loan. My suggestion is to leave the maximum loan obtainable at £1,800 but if the local authority is limited to loans on houses whose market value does not exceed £2,000, then I say leave the permissible loan at £1,800 but raise the value of a house, say, to £2,500 in order that the bigger type of house can come under this category.

It is quite clear by the introduction of this Bill that the Minister is letting no grass grow under his feet in his anxiety to put the people back to work, which is the policy of our Party. It was the policy of our Party in the last election to get the people back to work, as we said, "as quickly as possible". The Minister has made a great advance by his decision to meet the commitments of local authorities, by his decision to give access to the Local Loans Fund to local authorities for the payment of supplementary grants and by his statements in the Press, which did not receive sufficient publicity, in my opinion, that money would not be a deterrent to building.

The position now is that it is up to the local authority to do its share. The Minister for Local Government has said in no uncertain manner: "I shall make the money available from the Local Loans Fund to you for housing for the working classes, for the applicants within certain limits under the Small Dwellings Acquisition Acts. I shall recommend that the Local Loans Fund be there for you—but be it on your own heads-if you adopt supplementary grants."

What more can the Minister for Local Government do? He has covered everything by taking away this injustice to-day. Therefore, the members of local authorities in the House and people outside should remember that the ball is no longer at the Minister's feet. He has kicked the ball over to the local authorities. Let us hear no more cribbing here about housing. Everything the Department of Local Government could do has been done. There are only one or two knots to be tied here and there—purely administrative, minor points. Let the local authorities in Dublin, Cork, Limerick, Galway, Clare and everywhere else get down to work, get their architects or engineers to produce the plans and have their sites submitted and approved. Then you will have the people back at work and you will have the houses built all over the State wherever people are crying out for houses. There is just one knot to be tied, as I said yesterday, the necessity to bring in a Bill at a future date whereby derelict sites can be speedily acquired. However, I am not advocating that legislation now but submitting it for the Minister's consideration at a future date.

Mr. Smith

My position regarding this measure is that shortly after I came into office I received a request from the speculative builders—three or four organisations—to discuss their problems, and I think this was one of them. They explained to me the difficulties that had arisen in the past. They also explained that in consultation with my predecessor it was agreed that provisions, as embodied in the Bill before the House, would be introduced, and as it would take some time to have that prepared, a letter was to issue to local bodies inviting them to proceed as if what is in this Bill now was actually the law of the land.

That was, in their opinion, not a completely satisfactory arrangement. There was always the suspicion and the fear, as far as local bodies were concerned, that to administer something on the basis that at some future date it would be the law of the land was awkward and they were not inclined to do it as freely as if it were the law. In fact, they could not be expected to do it as freely in those circumstances.

These consultations preceded my time and these commitments were made before my time and I am merely honouring what was already done.

To those Deputies who have been critical of what is contained in this measure, Deputies Gallagher, Larkin and O'Malley, all I can say is that the people who were affected most keenly, the people on whom this problem had lain heavily, in consultation agreed on the formula that is provided for here by way of an amendment to Section 32 of the Act of 1950. It may seem cumbersome to those who glance at it for the first time. It might have seemed a bit cumbersome to me when I read it first also but I satisfied myself as I am asking Deputies to be satisfied. When the interested parties were seeking an amendment of the law in order to be relieved of the effects of Section 32 of the Act of 1950, that was satisfactory to me.

I could not understand on which foot Deputy Gallagher was standing. He did not know whether the local authority should be the final arbiter or not. He thought that when an appeal is being provided for, once an appeal is determined that should be binding upon the local body. I suppose one could thing along those lines but the builders who, as I have already explained, were very much in the picture when these matters were being discussed, all, apparently, agreed that the local authority should have the final say even after the Commissioner of Valuation had given his determination. There are other reasons that it is not necessary to give that support that approach. I agree with it. When persons are being critical, as Deputy Gallagher has been, they are taking the view, apparently, that a local body would set itself out to be obstructive, to be non-co-operative. I do not take that view. I believe that, once the new formula is decided upon by law, the local bodies will approach their work on the basis of that new formula and I do not believe that there will be very many appeals. I hope there will not be.

By way of reply to the point made by Deputy O'Malley, I am advised that an appeal can be made by any person, builder or otherwise. That being the case, he need have no fears along the lines that he expressed.

Question put and agreed to.

Agreed to take remaining stages to-day.