I move: "That the Bill be now read a Second Time."
The Bill deals in a comprehensive way with certain areas of housing policy. I propose to give Deputies a broad outline only of its provisions and intentions without dwelling in too much detail on what are essentially drafting technicalities. Detailed information about the Bill is set out in the explanatory memorandum.
In general, the Bill is largely a validating measure relating to changes made since 1972 in the schemes of financial assistance in the form of housing grants, subsidies and loans under the Housing Acts, 1966 to 1970. Particulars of these changes and of the retrospective dates involved are set out in the explanatory memorandum. An important point is that I have availed of this opportunity to include provisions in the Bill which will facilitate the making of such changes in the future as may be considered appropriate in these schemes of financial assistance without the need for special legislation to validate every change. The Bill also contains provisions to strengthen the present statutory basis for the control of the prices of certain new private houses and flats. It will provide for a new optional arrangement for pre-sale structural works to local authority houses and will enable certain land now vested in the Minister for Health to be transferred, principally for housing purposes. The Bill will give more flexibility to housing authorities in allocating their houses and empower the Minister for the Environment to direct a housing authority to sell, or not to sell, houses of a specified class. It will also provide for changes of a technical nature required in existing housing and building legislation.
I propose, for the convenience of Deputies, to deal briefly with the Bill, section by section, where possible. Section 1 is the interpretation section. Sections 2 to 7 relate to capital grants.
Regarding section 2, Deputies are aware that a pilot exercise in the devolution of the administration of the new house grant scheme to housing authorities was initiated in County Meath on 14 May 1973. In Counties Longford and Westmeath, similar exercises were undertaken in respect of the schemes of grants for reconstruction work and the installation of private water and sewerage facilities in individual houses, with effect from 1 August 1973. These arrangements were terminated on the introduction of the new State grants schemes in respect of new houses and house improvements with effect from 6 July 1977, and 1 November 1977, respectively, in order to avoid unnecessary duplication of administration. Section 2 of the Bill provides for validation of these devolved arrangements and generally provides also a statutory basis for the possible future devolution by the Minister of the administration of housing grant schemes if the circumstances so warrant.
Section 3 will authorise the Minister to make a grant towards the administration and general expenses of an approved body which represents, or promotes the formation of, co-operative housing groups or voluntary associations. This is a form of activity which I would wish to see developing. My Department's role is, however, of necessity, primarily a co-ordinating one and the success of non-profit housing depends largely on the dedication and initiative of the groups or associations involved. One body which has been to the forefront in fostering the concept of co-operation in the provision of housing, with consequent savings in construction and other costs and, indeed, which has been mainly responsible for the supervision and expansion of co-operative housing activity in recent years is the National Association of Building Co-operatives which was established in 1970. The Government are anxious that NABCo be given every encouragement and have accordingly approved a grant towards their administrative and general expenses in 1979. Incidentally, section 7 refers to grants payable to individual voluntary housing associations and I will touch on this aspect later.
Sections 4 to 6 replace sections 15, 16, 18 and 21 to 32 of the Housing Act, 1966—as amended by sections 2, 3, 4, 7, 8, 10, 11 and 14 of the Housing Act, 1970—and sections 2 and 3 of the Local Government (Sanitary Services) Act, 1962. In other words, three sections of the Bill will replace 25 sections in existing legislation. The grant provisions of the Housing Acts, 1966 to 1970, are inflexible in that the amounts of grants payable, floor area limits and other detailed qualifying conditions are specified by the Acts so that changes which were found to be desirable from time to time in grant schemes required amending legislation. This situation has proved to be unduly rigid in the light of the frequency of these changes. To meet this situation, sections 4 to 6 of the Bill have been drafted on the basis that a broad general power is conferred on the Minister or a housing authority to pay a grant for specified purposes, subject to such regulations as may be made by the Minister for the purposes of the section concerned. It is intended to make regulations governing the principal features of the grants. The proposed regulatory powers will be broadly in line with similar provisions in the 1962, 1966 and 1970 Acts, but modified to take account of changes made administratively since 1972 in anticipation of amending legislation. It is envisaged that future changes in grant schemes will be made by regulations under these sections. In accordance with section 5 of the 1966 Act, every regulation made under the Bill will be laid before each House of the Oireachtas as soon as may be after it is made and it may be annulled by resolution of either House.
Section 4 provides a statutory basis for new house grants payable by the Minister. Subsection (2) outlines the aspects of a grant scheme which may be incorporated in regulations and varied subsequently. Subsection (3) enables the Minister to lay down technical standards. Subsection (4) provides for certain cases of hardship. Between July 1977, when I introduced the £1,000 new house grant scheme for first-time owners-occupiers, and the end of May 1979, 17,389 grants were approved and 9,874 grants paid—4,674 grants were approved under the old scheme during the year ended 30 June 1977.
Section 5, which deals with house improvement grants payable by the Minister, broadly follows the same approach as section 4. With hindsight, it is somewhat tortuous to spell out in legislation separate detailed provisions relating to ordinary reconstruction grants, further grants, essential repair grants, improvement grants payable to housing authorities, water and sewerage grants, and so on. In the Bill, I have described a wide range of grants as house improvement grants and my aim is to simplify still further this grant scheme in the future. Section 1 contains a definition of "improvement works", which is based on the definition of "reconstruction" in section 21 of the 1966 Act. Paragraphs 5 and 6 of the explanatory memorandum set out details of the grant changes made since 1972. Incidentally, section 5 (1) will enable the Minister to pay a grant to a housing authority for improvement works to their rented houses; this replaces section 24 of the 1966 Act.
Section 6 of the Bill will enable a housing authority to pay a grant to a person providing a new house and to pay a grant or make other assistance to a person carrying out improvement works to a house, subject to such regulations as may be made. The Minister may also contribute to the expenses incurred by a housing authority in this regard. Section 6 validates the payment of grants by the authorities and the making of contributions by the Minister since 1 February 1972 in respect of improvement works to a house for the accommodation of physically disabled persons. This worthwhile scheme was extended to include severely mentally handicapped persons from 1 July 1975 and I increased the amounts of financial assistance substantially from 1 November 1977. Deputies are, of course, aware that, with the exception of the special scheme to which I have just referred and certain transitional cases, grants or supplementary housing grants are not generally payable by housing authorities since 1977. Section 6 is, therefore, mainly an enabling provision to cater for any schemes which might be considered appropriate in the future.
Another important scheme provided for in the Bill is the making of grants to approved bodies providing housing and caretaker accommodation for elderly persons. Deputies will recall that, in April 1978 I announced details of a package of financial assistance in this type of case, comprising grants, loans and annual subsidies. An improved package of assistance was announced on 1 February 1979. Section 7 of the Bill will empower the Minister to pay grants to bodies approved under the scheme, subject to such regulations as may be made. This section replaces section 19 of the 1966 Act. Loans and subsidies under the package are payable under section 12 of the 1966 Act.
Section 8 deals with house improvement loans. It replaces section 40 of the 1966 Act and section 4 of the Local Government (Sanitary Services) Act, 1962. Generally, section 8 will enable a housing authority to make a secured or an unsecured loan to a person carrying out improvement works to a house, subject to such regulations as may be made. In this way, the maximum unsecured loan, which is being increased from £200 to £600, may be varied with less administrative difficulty in the future.
Section 9 will enable the Minister to pay a subsidy to housing authorities towards the annual loan charges incurred by them in providing sites for private housing, subject to such regulations as may be made. One section largely replaces a corresponding provision in section 44 of the 1966 Act, but the new section is less restrictive as regards the amount of the subsidy. I have taken steps to increase the supply of serviced land by increasing substantially the allocation for sanitary services this year and I asked local authorities last August to consider the development of part of their land reserves with a view to making sites available for private housing, particularly as an incentive to tenants or prospective tenants of their houses to secure their own accommodation. To stimulate this activity, I increased the site subsidy available. This scheme is an important element in the attempts being made to curb increases in house prices.
Subsections (1) and (7) of section 10 validate the subsidy system which applied in the period from 1 April 1973 to 31 December 1976, under which most of the loss on local authority housing provided for letting was transferred on a phased basis to the Exchequer. Up to 31 March 1973 the payment of housing subsidy to local authorities was governed by section 44 of the 1966 Act, which is being repealed. Since 1 January 1977 the loan charges incurred by housing authorities on the provision of houses for letting are generally met in full by the Exchequer. Section 10 (2) provides for the payment of subsidy in accordance with the arrangements in operation since then, subject to such regulations as may be made. Under section 10 (5), subsidy payments can be made either to the housing authority or directly to the agency from which the loans were obtained. Subsection (6) contains a provision whereby, in the case of moneys borrowed from the Commissioners of Public Works, subsidy can also be effected by writing off moneys owed to the Commissioners by housing authorities. This would give rise to some savings in administrative costs, but unfortunately, it is not feasible to introduce this change just yet. If the change is made in a few years' time, it is intended that the amount written off should be clearly identifiable in the Estimates and in the Appropriation Accounts for my Department and that the Minister should be answerable in the Dáil for the sum involved in the normal way.
Section 11 of the Bill will provide a statutory basis for what is known as the low-rise mortgage scheme, which was introduced on 22 November 1976. Recently, I modified the scheme so as to enable certain two-person families, comprising one parent and one child, to qualify.
Section 12 provides statutory authority for the payment by the Minister of an interest subsidy from 1 June 1977 on certain house purchase loans made by a building society and guaranteed by a housing authority under section 42 of the 1966 Act. The loans were made during the period 1969 to 1972 to householders, mainly in the Donaghmede, Finglas, Kilbarrack, Kimmage and Tallaght areas of Dublin who qualified for the normal local authority house purchase loan at a fixed interest rate of 9 per cent from Dublin Corporation and from Dublin County Council. The societies charged the normal variable mortgage rates, and the effect of section 12 is to enable the Minister to subsidise the mortgage interest rates, thereby confining the interest rate charged to a flat 9 per cent.
Section 13 deals with the carrying out of pre-sale works to local authority rented houses prior to their sale to tenants. Section 106 of the 1966 Act requires a housing authority to put a house into good structural condition before the house is sold to the tenant.
I have been concerned that delays in having such pre-sale works completed were holding up the completion of the purchase by tenants. Accordingly, in order to expedite the completion of the arrangements for the purchase of local authority houses, a new optional procedure is being introduced under section 13 whereby the authority and the tenant may agree on the nature, extent and cost of the works necessary to put the house into good structural condition; and the tenant may, within a specified period, carry out the works directly or arrange to have them carried out. The authority would pay the tenant the agreed cost of the works on their satisfactory completion.
As I have said, this is an optional procedure. In the absence of an agreement, the original arrangement whereby the works are carried out by the housing authority will apply. The section also provides for statutory rights of appeal to the Minister under both the optional arrangements and the present arrangement.
Section 14 extends the general power in section 5 of the 1966 Act to make regulations by enabling them to be applied either generally or to specified classes of areas, houses, loans, persons, works or other matters. The section also largely replaces section 14 of the 1966 Act.
Section 15 validates rates relief given before 1 January 1978, arising from the introduction of improvement grants in respect of houses occupied by physically disabled and severely mentally handicapped persons in 1972 and 1975, respectively, and provides for rates relief consequent on the restriction of new house grants between January 1976 and 6 July 1977.
Section 60 (8) of the 1966 Act requires a housing authority, in determining the order of priority to be followed in letting local authority houses in accordance with their approved scheme of letting priorities to obtain and have regard to a report from their chief medical officer. The Health Act, 1970, transferred to health boards functions under the Health Acts previously exercised by local authorities. Since then, there has been a difference of opinion as to whether the existing provisions under the 1966 Act are still satisfactory. Delays have arisen in certain areas due to increases in the work loads of health boards.
Some housing authorities, however, consider that it is still desirable to have the advice of a medical officer of health of a health board for the purpose of letting houses and that, in that event, the authority should be required to have regard to the advice. Deputies will, no doubt, agree that in many cases, the staff of housing authorities could perform these duties. I am anxious, therefore, to provide a proper statutory basis for flexibility in the arrangements for the letting of local authority houses where this is found to be desirable. Accordingly, section 16 of the Bill provides that a housing authority may exercise a discretion as to whether they should obtain a report from a medical officer of health of the health board. Where, however, such a report is obtained, the authority must have regard to it.
At present, a housing authority have discretion under section 90 of the 1966 Act as to the sale of any of their houses. I want to ensure, however, that special, purpose-built houses which would normally be unsuitable for family use—one example would be elderly person's houses—are not lost from the rented local authority housing stock. On the other hand, I should like to make sure that most local authority tenants will be afforded an opportunity of purchasing their houses. Towards this end, section 17 of the Bill enables the Minister to direct an authority to offer for sale, or not to sell, as the case may be, houses of specified classes.
Section 18 deals with new house prices. The provisions are complex and their implications could be far-reaching. I should like, therefore, to speak about this section in some detail.
I am convinced that there is a need for a satisfactory framework for the operation of controls on the prices of new houses. I think this view is shared by the main political parties, on the basis of debates on this general issue in both Houses of the Oireachtas during the past few years. I understand that many builders also accept in principle the need for some form of house price control.
I should like to make it clear that I do not envisage that the form of house price control which is implemented following the enactment of the Bill will remain unaltered indefinitely. A flexible approach must be adopted and controls adjusted, in consultation with interested bodies, to take account of changing circumstances. Indeed, it is conceivable that the controls could be dismantled from time to time.
Section 18 replaces section 35 (2) of the 1966 Act, under which the system of certifying reasonable value in respect of the prices of new houses and flats has operated up to now. I think, however, it is generally agreed that it no longer provides an adequate statutory framework for the operation of this form of control on house prices. Initially, the Minister simply refused a grant for a house where the consideration being charged exceeded the amount appearing to him to represent reasonable value.
Though this may have been a compelling reason for house builders to obtain and adhere to the terms of certificates of reasonable value (or CRVs, as they are commonly referred to) at the time of their introduction in 1973, when practically all grants for speculatively-built houses were paid to the builders, it is certainly not the case since January 1976, when grants have been payable only to occupants of the houses concerned, not to the builders. At present a builder, having obtained a CRV and committed a purchaser on the strength of it, has no further direct financial incentive to ensure that the terms of the CRV are adhered to and, should any unauthorised departures come to light, it is the purchaser who may suffer to the extent of losing the £1,000 grant, stamp duty exemption and, possibly, since August last, a house-purchase loan.
It is evident to me that the volume of abuses and circumvention of the CRV system has grown since 1976 and it is incumbent on me to bring before the House proposals to counteract these tendencies. These abuses have been highlighted by Deputies on a number of occasions in the House, in the media and in the numerous complaints made to my Department by aggrieved house purchasers. I should like to give some examples of the type of abuse which the new provisions are designed to combat.
Builders have been known to charge prices far in excess of the CRV price while at the same time telling purchasers that they had a CRV and that there would be no problem about the grant or the stamp duty exemption. Cases have come to light of extra money being charged "under the counter", of circumvention by means of departures from price variation clauses and of charging extra for items already included in the approved CRV price. It has also been alleged that contracts are being drawn up under which the sale terms purport to comply with the terms of CRVs when in reality they do not. Another unpalatable aspect of the present situation is that builders who are prepared to abide by the spirit and letter of the system can be put at a disadvantage vis-à-vis less scrupulous competitors.
Broadly, section 18 has two main purposes: first, to empower the Minister to require that certain loans by lending agencies for the purchase of new houses cannot be made unless a CRV is obtained; and second, to impose clear obligations on builders in relation to the construction and sale of houses for which they have obtained a CRV and to enable the Minister to take effective action against those who fail to fulfil these obligations.
Subsection (2) gives effect to the first purpose. I should emphasise that this subsection is an enabling provision which will apply to such categories of loans and for such periods as the Minister may by regulations provide, having regard principally to trends in house prices, costs and earnings, the availability of mortgage finance and the national housing programme. It is not intended that this requirement should apply to short-term borrowing, such as bridging finance; hence, the definition of "loan" in subsection (14).
The remainder of the section deals with the second purpose I have just mentioned as well as making general provisions relating to the issue of CRVs. The broad concept of reasonable value as enshrined in the 1966 Act is not being changed in any material way nor does the new measure imply any fundamental innovation in the approach to the determination of what constitutes reasonable value.
Subsection (6) imposes an obligation on a builder to ensure that a house is contructed in accordance with his application for a CRV and that the price charged is in accordance with the terms of the CRV. It also obliges the purchaser to see that where a CRV exists, and he enjoys the attendant benefits, the price paid accords with the CRV. This should thus deter any possible collusion between builder and purchaser in order to circumvent the CRV requirements.
Subsection (8) comprises an important provision which will enable the Minister at his discretion to refuse, for a period not exceeding five years, to consider any further application for a CRV from any person who has previously obtained a CRV and has either supplied false or misleading information or failed to fulfil requirements under section 18. Before exercising this power the Minister will be required to notify the person concerned of his intention to do so, giving his reasons, and give him an opportunity of making representations in the matter. Furthermore, any person so affected has a right of appeal to the High Court against the Minister's decision. I consider that this power will constitute an effective deterrent against abuses of the type to which I referred earlier. I envisage that the power will be invoked in exceptional circumstances only.
Provision is made for offences under subsections (2), (5), (6), (9), (10) and (11). Subsection (12) provides a defence relating to proceedings for an offence. Provision is being made also for an appeal to the High Court against the Minister's opinion under subsection (14).
To sum up, I think that section 18 will provide a comprehensive statutory framework for the operation of a form of control on the prices of new houses and flats which benefit from State funds or which are financed by mortgages available from limited resources.
The section attempts to strike a fair balance between the interest of the public authorities, the householder, the builder and lending agencies.
Section 19 will extend the categories of persons specified in section 1 of the Statutory Declarations Act, 1938, who may take and receive a statutory declaration for the purposes of an application for a grant, loan or subsidy under the Bill. This measure should facilitate individual householders.
Section 20 contains an amendment of section 30 (2) of the Building Societies Act, 1976, which relates to the powers of the Registrar of Building Societies to investigate the affairs of a society. The section will remove any doubt as to the constitutionality of the existing provisions. The point at issue is similar to that for which provision was made in the Tribunals of Inquiry (Evidence) (Amendment) Act, 1979. The section will also extend the Minister's power to make regulations under section 77 of the 1976 Act in relation to the amounts and purposes of building society loans. This latter amendment has been found to be necessary in the light of experience since the coming into operation of the 1976 Act. For example, it is necessary from time to time to take steps to reconcile the anticipated level of mortgage lending for new houses with the financial needs of the national housing programme.
The purpose of section 21 is to enable the Minister for Health to transfer, mainly for housing purposes, about 54 acres of land at Navan Road, Dublin, to Dublin Corporation and the Commissioners of Public Works. That Minister presently holds the land in trust under section 21 (3) of the Saint Laurence's Hospital Act, 1943, and amending legislation is necessary to ensure satisfactory title on transfer of the lands.
Section 22 of the Bill and the Schedule repeal those sections of the Housing Act, 1966, and of the Local Government (Sanitary Services) Act, 1962, which are superseded by various provisions of the Bill. In all, 30 sections are being repealed wholly or in part and ten sections of the Housing Act, 1977, will be spent when the Bill becomes law. Section 22 includes transitional provisions, where appropriate. It also repeals sections 93 (6) (a) and 98 (5) of the 1966 Act, which enables a housing authority to require payment, generally referred to as a "clawback" payment, to them of part of the profit made on resale by a tenant purchaser of certain houses.
Finally, section 23 of the Bill relates to Title, collective citation and construction. The Bill contains retrospective provisions in sections 2 to 7 and 10 to 12. It is proposed that the remaining sections will come into operation when the Bill is enacted.
Before I conclude I should say that I very much regret the fact that the Construction Industry Federation launched into print recently about section 18 of the Bill without due concern for the facts of the matter. Their press notice of 1 June contained several inaccurate and misleading statements. It is scarcely necessary for me to repeat at this stage all the points which I made in a press rejoinder which I issued on that date. I would simply reiterate the fact that, since this Government resumed office, there have been numerous meetings between the CIF, the Minister, the Minister of State and senior officers of the Department at which various aspects of the CRV system were discussed. I considered, nevertheless, that it would have been entirely inappropriate to have the provisions of section 18 discussed with the CIF in advance of the Bill being circulated to elected representatives in this House. I informed the federation, however, as recently as 23 April last, that as soon as the Bill was published any observations made in the matter by elected representatives, by the federation and by other interested bodies would be carefully considered.
I received a request from the federation to meet them and hear their views on the Bill. In reply I stated that I was prepared to meet a deputation, as requested, and that firm arrangements for the meeting would be made as soon as the federation let me have details of the matters they intended to raise. On 25 June I was informed that the federation did not wish to add to their views as set out in their press notice of 1 June.
In similar circumstances the Irish Building Societies Association, which is particularly concerned about aspects of section 20 of the Bill, also asked me recently to meet a deputation to present their views and submitted in advance a memorandum setting out in considerable detail points which they want to press and the reasons why they feel that the section as drafted should be changed.
I regret that, due mainly to pressure of other commitments, I was unable to meet representatives of the Construction Industry Federation and of the Irish Building Societies Association. I should like, however, to take this opportunity to say that, having considered the representations already made, I shall move a number of amendments to the Bill on Committee Stage. In particular, I intend to provide that, where the Minister refuses to grant a certificate of reasonable value pursuant to subsection (3) (a) of section 18, the applicant will have a right of appeal to a court. I intend to provide expressly that the question of the interest rate applicable to building society loans shall not come within the scope of regulations made under section 77 of the Building Societies Act, 1976, as amended by section 20 of the Bill. I commend the Bill to the House.
