asked the Minister for the Environment why he has decided to abolish the low-rise mortgage scheme.
Ceisteanna—Questions. Oral Answers. - Mortgage Scheme Abolition.
14.
I have decided to phase out the low-rise mortgage scheme and instead to bring in a new scheme of special loans and subsidies for eligible categories of persons. Under the scheme persons previously eligible for the low-rise mortgage scheme will be able to get loans of up to 98 per cent of the approved value of a private house subject to a maximum loan of £18,000. As before, a person who wishes to purchase rather than rent the new local authority house allocated to him may get a mortgage of up to the full net cost.
Instead of the graduated subsidy available to applicants under the low-rise mortgage scheme it is intended that the special mortgage subsidy will apply to persons who qualify for the special loan of £18,000 whether they buy new or previously occupied houses and also to persons who qualify for a mortgage to purchase a newly allocated local authority house. I think that answers the question.
Would the Minister of State agree that the Government have decided to abolish any income limit in relation to housing interest subsidies? I refer him to the bottom of page 1 of the housing section where it states there is no means test and that the new housing subsidy applies to both single and married persons. Does he agree that that is the case?
Yes.
If that is the case, as is stated on page 3 of the same circular, there is going to be an inordinate demand for funds to pay for people who can afford to buy houses in their own right. Would the Minister of State, therefore, agree that the purpose of the low rise mortgage scheme was to give financial assistance to people who could not afford to finance the purchase of a house on their own and that the effect of this measure is, in classic Robin Hood style á la Fianna Fáil, to take from the poor and redistribute to the rich on the eve of an election?
Of course, the Deputy knows full well that that is not the position. The maximum loan was £12,000 or 98 per cent of the value of the house, whichever was less. A mortgage up to the full cost of providing the house could apply to the purchase of a new house and the repayments of the loan could be reduced by a combined State and local authority subsidy of £624. They are going to be far better off under the new housing package.
Finally, the Minister of State knows definitely that they are going to be far better off under this package, but how much is it going to cost? He will have to relate it to general taxation and foreign borrowing.
I have not got those figures.
He will not have to worry about it.
It is made up of the subsidy as such and also the £1,000 new house grants.
Is it not a fact that a scheme which was operating specifically to deal with people in the lower income groups to assist them in purchasing their houses by subsidising their rent over a period up to the tenth year is now being substituted by a scheme which, on the face of it, will give a loan to anybody who has not previously bought a house over a much shorter period, three years, and will prevent those who cannot afford to pay the high interest rate from buying such a house because they will not be able to find for the next six years the subsidy which would be given under the low-rise mortgage scheme? Secondly, is the Minister of State saying that the amount of money, millions of pounds, which has been found to be inadequate for the year 1980, is now going to be used to apply to a much greater group of people so that the money which could not be given last year will not be available at all this year? Does the Minister of State know that? Is this just eyewash, because there is to be a general election and people will not get an opportunity of looking at all this in time?
I do not accept the suggestion that it is eyewash. It must be remembered that, while the maximum loan was £12,000, one of the difficulties for those people was the bridging of the gap between £12,000 and the cost of the house. There has been an increase of 50 per cent——
In the cost of the house?
——in the maximum loan under this Government.
(Interruptions.)
We cannot have a debate on it.
Under the old scheme with regard to the £12,000 loan, what was the saving to a person who used the low rise mortgage scheme loan rather than a conventional loan? It was well in excess of £4,000. Would that be correct?
Of course, it was.
Has the Minister of State got an estimate?
I have not got the estimate.
He went ahead and abolished the scheme.
I would suggest that it would be close to £10,000.
A final supplementary from Deputy Crotty.
Could the Minister of State tell us how much subsidy was paid under the low rise mortgage scheme to an applicant who qualified if a £3,000 subsidy is available now?
Is the Deputy looking for the expenditure?
No, the subsidy paid to the individual.
On a normal £12,000 loan.
The qualifying criteria under the low rise mortgage scheme——
We are not asking that.
—were rather tight. A mortgage of up to the full cost of providing a new house could apply to the purchase of the house. Repayments on the loan of £5,600 or upwards could be reduced by combined State and local authority subsidies of up to £624 in the first year, diminishing by over £68 each year until the applicant was paying the full repayment in the tenth and following years.
Ceist 15.
What does that amount to?
I have not got the figure but——
If the Minister made up the figure he will find that it was in excess of what is available now.
It does not in any way compare with the present package.