(Dún Laoghaire):——and also that the money which is coming into the fund will be from pension funds and life assurance offices. We have heard on various occasions about the need to provide better pensions. If pension funds can be invested in something like this there will be a fair return for investors. We are losing sight of the fact that this is a genuine effort to provide funds for people to buy their own homes. We have heard about SDA loans and various other schemes and that there will be no help from the Exchequer. There is no mention in the Bill that grants will be abolished. Surely that is assistance from the Exchequer?
As Deputy Reynolds knows, the SDA loan has a fixed rate of interest. Does he think it justifiable that someone who has an SDA loan of £4,000 should expect the State to subsidise that loan after 20 years? I do not think that is fair when there are queues of people in various parts of the country trying to get loans to buy a house for the first time. We must be realistic and accept the fact that if we are going to give people assistance there will be some initial flaws in the scheme. The Minister said he is being very careful about who will get the loans and the amounts which will be authorised. That is the right thing to do — we all have to creep before we can walk. I am surprised at the Opposition party having fears about giving money to people to buy their own homes, that we might be putting more money into the pockets of financial institutions and that this could damage the building industry. Any money given towards housing will help the building industry, which is so important.
We were asked if insurance companies would stop giving loans and if there would be unfair competition. I am in that business and I can tell Deputy Reynolds that insurance companies will give you loans at fixed rates of interest at present. You will get a loan at perhaps 18 per cent fixed over 25 years. If the interest rates drop after some years you still pay 18 per cent, so what is the difference? Here is an opportunity for somebody to take on a contract knowing at the outset, contrary to what Deputy Reynolds thinks, what his or her liabilities are going to be. I am sure that when Deputy Reynolds hears the Minister's reply all his fears will disappear and I have no doubt he will welcome the Bill as wholeheartedly as I do.
I listened with interest to Deputy Haughey yesterday when he spoke about local authority houses and SDA loans. He said the only thing wrong is that local authorities are starved of finance. I am glad to hear the ex-Taoiseach admit that his Government starved the local authorities of finance for housing, because I agree with him. That is evident from the fact that when this Government took office a Supplementary Estimate for £30 million had to be introduced to pay for the existing contracts the previous Government had entered into. I do not think the arguments put forward by Deputy Haughey yesterday hold much water.
It is time people realised that out there in the big bad world young people are becoming very annoyed and upset because of the fact that they cannot get homes. It is time we as politicians recognised this. When we do something that will help these people we should not put up arguments against it for the sake of doing so. This is a genuine effort by the Government to encourage people to buy their own homes, to get off the local authority waiting lists and to be taken out of hovels into which they are forced in order to get a local authority house.
I spoke in this House before about this aspect of Irish life, which I deplore and which has crept into our society, particularly in the Dublin area. Any effort which will encourage people at an early stage to save a deposit knowing that there is an agency behind them which will give them a reasonable amount of money to buy their homes should be encouraged. I came up through the local authority structure and I saw many families destroyed by bad housing. There was no one there to help those couples at an early age.
In Dublin at present if you want to get a local authority house you must have at least one child and you must be living in grossly over-crowded conditions. In effect that means one room. If we build a society which forces our young couples to live in one room at a very delicate state of their marriage, we will get one of two things. We will get very united couples, or very many split homes. The pressures facing these people day in and day out in bad housing conditions with their children in bad health are enormous. I am against saying they must take their chances on the local authority housing list. That is not what we want in Irish life in the future. It is a worthwhile exercise to encourage people at an early stage to save money to buy their own homes. Any effort to assist them must be welcomed by all politicians irrespective of party.
I welcome this Bill. It shows imagination. It recognises that it is necessary to help people to buy their own homes. Under this Bill they can borrow up to two-and-a-half or three times their salary and make repayments at a rate of aproximately 15 per cent of their income. This is a very positive type of approach. At present if somebody on an income of £9,000 borrows two-and-a-half times his income, in the first year of repayment he pays back 43 per cent of his gross income. That is wrong. That is where the problem lies. That is why this Bill should be welcomed by everyone. It is giving people an opportunity to get a realistic sum of money which will help them to get off the ground at an early stage and into proper housing. I fail to see how anybody could have any doubts about this. I thought all parties would praise the Minister for introducing a Bill showing such vision as this Bill does.
Anything which takes people off the local authority housing list is to be welcomed. We will always have people within our society who will need local authority housing. I cannot see how this Bill will interfere in any way with the State's commitment to provide housing for those who genuinely cannot afford it. This agency will give a realistic loan to those who need a little help.
There is no point in talking about SDA loans if the limits set are so low, or go out of date so quickly, that they are of benefit to nobody. There is no point in giving people in Dublin a loan of £14,000 if their income is under £7,000 and the purchase price of the house is £26,000. That is asking somebody with an income of under £7,000 to save £12,000. That is totally unrealistic. It is out of the question. The SDA loan is utterly irrelevant to the vast majority of people. Whether we like it or not, one-third of the population live within the greater Dublin area. Therefore, effectively one-third of the population are cut off from getting a loan through the SDA system. It is easy to see that the SDA system does not apply in Dublin and that is the area I know best.
I saw an example the other day. You can borrow £18,000 through the SDA system provided you have been a year on the housing list, have one child and live in grossly over-crowed conditions. There is no income limit. If people living in a rented two-bedroom cottage are told they have to get out of it — and this is the case I am quoting at the moment; this couple have to get out next January — if they apply for the £18,000 loan, they do not live in grossly over-crowded conditions and they will not get the loan. What is the alternative? They can get a £14,000 SDA loan provided their income is under £7,000. This is totally irrelevant in my book.
I would prefer to get on and do what we should be doing, that is, to make a genuine attempt to give money to people who need it and to give them a realistic amount which will enable them to buy a home, instead of going through the charade of saying we have an SDA loan scheme which does not apply to the vast majority of people who look for these loans. This does nothing to help the building industry or to help anybody to get a home.
This Bill approaches the problem from the right direction. It tells people they can borrow up to two-and-a-half times or three times their income and make repayments over a given period of time at a percentage of their income. It is unrealistic to expect people to pay 43 per cent of their gross income in the initial year. Those people are now finding their way onto the local authority housing list and ultimately the State has to provide a house and fund 100 per cent of the construction of that house.
The fears expressed by Deputy Reynolds are unfounded. I would have thought he would have come in here to support the Bill. It is very important to support the building industry which gives a vast amount of employment. It has been a part of Irish life and it has provided an excellent service for those anxious to set up homes.
There has been a change of attitude in so far as we realise there is a need to look at the funding of mortgages and in regard to the type of houses we are building. The standard estate in Dublin and elsewhere nowadays is made up of three-bedroom semi-detached houses and we are asking newly-weds to buy these houses, whether they want them or not. I would appeal to the agency when they begin operations to ensure that funds will be made available to purchasers of one-bedroom and two-bedroom houses. In the early stage of home building people should not be required to take on three-bedroom houses. That is not to say that they should not be enabled to do so if they wish, but we should ensure that funds will be available to assist large groups of people, particularly because the agency will cater for single people. A single person may borrow from the agency and that single person may only need a single-bedroom house. From the point of view of both the building agencies and the new housing agency it is desirable that we would get down to providing one-bedroom and two-bedroom dwellings in our cities.
In the initial stages of the agency's development there will be an income limit of £9,000. I can understand fully that that should be so because I do not think there is much point in a State agency being set up that would be seen to challenge existing agencies such as the building societies. If the building societies are catering generally for people in the £11,000 to £12,000 a year salaries bracket I do not see any benefit in this agency being seen to be in competition with building societies at that level.
The Bill seeks to achieve assistance for people who have not got loans from building societies. I therefore appeal to the Opposition to appreciate that we are talking about a serious problem and that it is essential we get it right. Our housing policy will determine the type of society Ireland will have in the future and if we allow the present situation to continue we will build a society none of us will be proud of. Weaknesses in the legislation may be picked out in the future through aspects of the agency's operations, but the principle behind the legislation must be welcomed and a lot of good can be achieved if the Opposition recognise that and give the agency proposal their full support.
Deputy Reynolds expressed concern about the administration of the loans schemes. If he had read the Minister's speech carefully he would have learned that they will be administered by the local authorities throughout the country. It would be useless to establish another group of offices throughout Ireland to do what the local authorities are geared to do. I am sure the local authorities will be pleased to administer these new loans. I think it is a very good idea that the Minister and the agency should decide to use the local authorities to deal with applications at local level.
I was glad to hear Deputy Reynolds mention the co-ops. I was relieved to read that particular attention is being given to them. I have seen them work with a great measure of success in Dublin. One thing they can do is to give houses to the people. It is a big challenge for people on their own to enter into a commitment of that size but when you have a group of people coming together in a co-op things are made easier because the group can negotiate and engage contractors, and they can be financed by the new agencies, which will be of great assistance to the co-op movement.
Another aspect to which sufficient attention has not been given in the past is the help the agency will lend to people to purchase existing houses. I have found it difficult to accept that many people would be concerned exclusively with new houses, because I know that many people in Dublin would be glad to purchase existing two-bedroom or one-bedroom houses. Such houses are in very short supply, possibly because it was hard to get finance for that sort of house. It is good to realise that the Minister means to assist people to purchase such houses.
As I have said, it is good to see flexibility, and I welcome the fact that single people will be able to borrow from the agency because we should encourage people to buy houses in advance of marriage. That will be to everybody's advantage ultimately.
Deputy Reynolds asked what will happen if a mortgagee gets sick. The Minister's speech makes it clear that there will be a very sensible approach to this. If somebody gets sick special arrangements will be made to extend the term of the loan, and repayments can be suspended for a short time until they overcome sickness or get employment if they are unemployed. Recently I read an article by the St. Vincent de Paul Society about the new poor in Ireland, the people in the middle income group who have found themselves unemployed and have found heavy mortgages around their necks.
This is a worthwhile aspect of the operations of the proposed agency in so far as it recognises that if somebody becomes ill or is unemployed some assistance will be given them, with more flexibility being allowed in the way they can make repayments or indeed extend the term of their loan. This is particularly to be welcomed in view of the recent comments of the President of the Saint Vincent de Paul Society which spelled out the massive amount of money they have had to give to people who, through illness or unemployment, were unable to meet their repayments.
When the agency is established I would recommend that its operations be reviewed from time to time. I am thinking particularly of circumstances in which if somebody can obtain a loan from another lending agency but cannot raise a sufficient deposit, the agency could be asked to help out. The whole purpose behind this Housing Finance Agency is to help people get off the ground at an early stage. I would hope it would be possible — and I have no reason to believe otherwise — that once established the agency could see its way to help people raise a deposit through an additional loan or perhaps second mortgage. I have no doubt but that this agency will be a great help to all citizens.
Another matter causing grave concern in Ireland today is that there are a number of old people, particularly those on fixed incomes or pensions, who find themselves living in rather large, three, four or five-bedroomed houses whose upkeep they cannot afford. They find it very difficult to maintain such a property to a good standard. They genuinely cannot afford the house in which they are living. The sooner people in that position here — as has happened in other European countries — can be allowed sell their homes and with the money they receive subsidise their already fixed income, the better. I have in mind here such persons selling their home, remaining in that home for the rest of their lifetime, the proceeds being used at the time of receipt to supplement the fixed income or pension, at the same time guaranteeing proper accommodation in the environment to which they have been used. When the time comes that such a person dies that property should then revert to the agency. Perhaps the Minister could consider this aspect in the future.
As somebody who has been involved in this business for a number of years through insurance loans, I have been approached by people on numerous occasions, people living in three, four or five-bedroomed houses whose upkeep they cannot afford. Yet they have nowhere to go, they do not want to leave, they would be anxious to mortgage their house and remain there for the rest of their lifetime. This would constitute a worthwhile advancement on our thinking in regard to old people. I could not for the life of me see why it could not be arranged. There will always be capital appreciation in housing. If an agency such as this could foresee their way to assisting those people to get a loan, with the guarantee that they could remain on in that property for the rest of their lives, the property then reverting to the agency, that is something that would be welcomed by everybody.
I welcome this new thinking in terms of financial assistance towards housing, particularly for young people starting off. I welcome the fact that the Opposition also will afford this agency a chance to get off the ground, giving them every encouragement because ultimately the country at large will benefit.