Housing Finance Agency Bill, 1981: Second Stage.

I move: "That the Bill be now read a Second Time."

The objectives of this Bill represent a radical change in housing policy. Under the Bill, I intend to introduce a pilot scheme which will provide an option to purchase to many people who simply cannot obtain adquate mortgages at present.

The Bill will provide the statutory framework under which a company, to be known as the Housing Finance Agency, will operate. The company will be established soon after the Bill becomes law. I would welcome the support of Deputies on all sides of the House for this Bill. I think that it is imperative that the Bill should be enacted in the current session.

The primary purpose of the agency is to raise additional finance for housing mortgages on a self-financing basis. In its first year of operation, it is intended that the agency will raise some £25 million to £50 million for these mortgages. This money will be obtained mainly by selling State-guaranteed bonds, linked to the rate of inflation and having a small real rate of return, to the operators of pension funds and life offices. A first-time purchaser of a new or an existing house, with an annual gross income of up to £9,000 in the previous tax year may obtain an ordinary loan of up to £22,500 and up to £27,000 in special cases. The amount of the loan in any case may not exceed three times the borrower's annual gross income in the previous tax year and 90 per cent of the net value of the house.

The borrower will be charged an index-linked mortgage rate, taking into account the real rate of return to the bondholder and administrative costs. To ensure that a borrower will not be required to make excessive repayments in any year, actual loan repayments under the new scheme may be made on a pay-related basis. Where a person borrows three times his gross income in the previous tax year, he may repay the loan over a period of about 25 years on the basis of 18 per cent of the gross income in the previous tax year, which would be equivalent to about 15 per cent to 16 per cent of current earnings, based on recent experience. Where a person borrows less than three times his income, the proportion of pay taken in repayments may be less. It is intended that individual loan applications will be processed by local authorities who have successfully operated the traditional house purchase loan scheme for more than 80 years.

A scheme providing for tapping institutional funds in order to give loan assistance to first-time purchasers was first mooted in a policy document published by Fine Gael in October 1980. An outline of the proposals was also contained in the party's policy document of last May and in the Programme for Government 1981-1986, announced on 28 June 1981. The proposals in these policy documents were based on the premise that there is a need to provide a new source of finance. I am satisfied that the existing sources of mortgage finance are not able to cope with the extra demand for loans. Furthermore, if a person with an annual income of £9,000 borrows £22,500 over the typical 20-year period from a building society in respect of the purchase of an existing house, his gross repayments in the first year, at current interest rates, would amount to £3,846, representing 43 per cent of his income. This is patently unsatisfactory.

As regards raising money for the new scheme, the Government have decided to adopt a radical approach by providing in the Bill that the new agency may issue index-linked bonds having a real rate of return of such amount as may be approved by the Minister and the Minister for Finance. Initially, it is intended to issue the bonds to pension funds and life offices only. The issue will be on an auction or tender basis as regards the amount of the real rate of return. The manner of repayment of both principal and interest will be decided by the Minister and the Minister for Finance. It is proposed to make provision for a market in the bonds, but for the time being, this will be limited to the pension funds and life offices. It is entirely appropriate that the agency should be funded mainly by these sources; the terms of the bond issue will safeguard the investments made, mainly by small savers, in these institutions.

Under section 5 of the Bill, the agency will be empowered to make loans to individual borrowers. It is proposed, however, that within the foreseeable future, local authorities may operate the loan scheme either on the same broad basis as they obtain money from the Local Loans Fund or alternatively, they may act as agents. There would be no point in arranging for the agency to set up a local branch network when 41 local authorities already efficiently administer house purchase loan schemes throughout the country. In general, the new scheme is aimed at helping mainly the marginal house purchasers, or in other words, first-time purchasers earning up to £9,000. This new limit relates to the gross income of the borrower, excluding the spouse's income, in the tax year preceding the date of application. Many of these people find it difficult to obtain loans from other lending agencies. Persons qualifying under the existing local authority loan scheme will be allowed the option of repaying their loans in accordance with the proposed terms. It is envisaged that, at full operation, this new scheme will replace the local authority loan scheme. Under the new scheme, the maximum loans available from public funds will be increased very substantially. In ordinary cases, the agency scheme will enable loans of up to £22,500 to be made, compared with £14,000 under the existing scheme. Special categories of borrowers, such as a tenant of a local authority house surrendering the tenancy of his house and buying a private house, may now qualify for a loan of up to £27,000, compared with £18,000 under the existing SDA scheme. In the case of houses on certain islands off the west coast, the maximum loan is also being increased to £27,000. In the case of a loan for the acquisition of a house, the new limits will apply where the contract is not made before today. In the case of a loan for the construction of a house, the new limits will apply where the foundations were not completed before today. The new limits will be kept under review.

I think that the development of housing co-operatives should also be assisted. In an effort to promote activity by these voluntary bodies, the Government have decided that, where a bona fide housing co-operative builds houses on sites provided either by housing authorities or by the co-operatives directly, members of the co-operative who have annual incomes of up to £9,000 or are local authority tenants can qualify for loans of up to £27,000 under the new scheme, provided that at least 80 per cent of the new householders are otherwise eligible for house purchase loans under the scheme.

Loans under the scheme will not distinguish between new and existing houses. Furthermore, loans will not be confined to married persons and persons about to marry. One other important development is that a loan applicant will not, as in the case of SDA loans, be required to prove that he cannot obtain a house purchase loan from commercial agencies. While the loan will normally be restricted to first-time purchasers, loans will also be available where a home-owner wishes to buy a bigger house because his existing house is unfit or overcrowded. Loans will be made where a home-owner is obliged to obtain alternative employment in another area and wishes to buy a house there. In particular, a key industrial worker moving into an area will be facilitated.

As I mentioned earlier, actual loan repayments under the new scheme may be made on a pay-related basis. Where a person borrows three times his gross income in the previous tax year, he may repay the loan over a period of about 25 years on the basis of 18 per cent of the gross income of the principal earner in the previous year. This proportion may be reduced to 16 per cent, 14 per cent and 12 per cent where the amount borrowed represents 2½, 2 and 1½ times, respectively, of the borrower's gross income in the tax year prior to his application. The pay-related approach to loan repayments will usually result in the amount of the principal outstanding increasing in nominal terms in the early years but in case there may be any misunderstanding, it must be emphasised that the amount of the principal outstanding under the proposed system normally declines in real terms when inflation is taken into account.

The essential feature of the new scheme is the way in which the real burden of loan repayments will be spread evenly over the duration of the loan. This feature will give access to home ownership to many for whom the extremely high repayments burden in the first few years of a conventional annuity mortgage is an effective deterrent.

In addition, the scheme will protect the borrower against the short-term effects of a loss of income due, for example, to sickness or unemployment, in that repayments required in any particular year may be restricted to the proportions of income to which I have referred, with the shortfall being made good in later years by the lengthening of the repayment period, if necessary.

The total repayments will be calculated to ensure that the agency are self-financing, taking one year with another. Thus, they will be based on the agency's total costs, including the cost of servicing the index-linked debt. It is not possible to say for certain whether borrowing will in the long run prove to have been more or less expensive than borrowing on a conventional annuity mortgage. That will depend on the evolution of inflation and mortgage interest rates in the decades to come. In Ireland, mortgage rates exceeded inflation rates for part of the sixties, while the reverse situation has obtained for most of the seventies. The upward trend in interest rates in the last year or so has resulted in the mortgage rate exceeding the inflation rate in many countries. In Ireland, while inflation rates generally are relatively high at present and may remain so for another year or two, the Government are determined to curb inflation rates in the next few years.

During the period 1973 to 1980, increases in average annual industrial earnings exceeded the rates of inflation by 3 per cent. While increases in earnings are likely to be less than the inflation rate during the next year or so, earnings are likely to grow in real terms in the long run.

In any event, of course, repayments will cease when the total amount required to cover the agency's costs have been repaid, even if this is long before the originally envisaged maturity date. Where a person qualifies for the mortgage subsidy of £3,000, it is intended that the borrower will transfer the subsidy payments to the lender, thereby reducing the amount of the loan outstanding and shortening the repayment period.

In order to cut red tape, this scheme generally disregards the income of a spouse. Borrowers will be free to make repayments over and above the specified proportions of income at any time if they so desire. This will reduce the capital debt outstanding at that time and shorten the repayment period.

Under section 6 of the Bill, the Minister will be empowered to issue formal general policy directives to the agency, with the consent of the Minister for Finance. The agency will, of course, be primarily responsible for formulating policies, but it may be necessary for the Minister from time to time to issue directives which relate to social and economic aspects of the agency's work. Under section 14 of the Bill, the agency will be required to meet their costs from their operations, taking one year with another.

As regards the detailed provisions of the Bill, I should like to refer Deputies to the Explanatory Memorandum which I have circulated and add a few brief comments at this stage.

A substantial part of the Bill relates to technical provisions which apply to most State-sponsored companies. Section 2 provides for the formation and registration of the company. Under section 3, the share capital will be £100 and this capital cannot be increased or reduced without the consent of the Minister for Finance. Section 4 refers to the memorandum and articles of association and sets out key objectives of the company.

I have already referred to section 5 in some detail. Subsections (3) to (8) are very technical and are based on the corresponding provisions of section 39 of the Housing Act, 1966 relating to the existing local authority loans scheme.

I have already referred also to section 6. Sections 7 to 9 are fairly standard provisions relating to the taking up of shares by the Minister for Finance, his rights as a shareholder and the disposal of any dividend and so on arising from such shares.

The Minister for Finance occupies a central role relating to the capital and shares of the company. I have in mind that the board of directors would be drawn from persons with relevant experience in the commercial and public service.

Section 10 enables the agency to borrow money up to a limit of £200 million; in the first year, borrowing may be of the order of £25 million to £50 million. In particular, the agency may issue bonds. Section 11, which is a standard provision, empowers the Minister for Finance to guarantee borrowings; this would enable the agency to issue State-guaranteed bonds. By virtue of section 10, guarantees will also be limited to £200 million.

Sections 12, 13, 15, 17 and 18 are standard provisions.

I have referred already to section 14 which requires the agency to be self-financing. Under section 16, any transfers of bonds, debentures and other securities issued by the agency will be exempt from stamp duty in the same way as transfers of certain loan stocks. Before I conclude, I should say that I expect that applications for loans under the new scheme will be accepted within about six weeks. The first bond issue will be made within about three months.

I commend the Bill to the House.

We have now had the benefit of the Minister's speech outlining what the Government have in mind for this agency. The Bill as presented to the House yesterday was described as a skeleton Bill and did not in any way clarify how the Government envisaged the agency operating. In his speech the Minister said that the essential feature of the scheme is the way in which the real burden of loan repayments will be spread evenly for the duration of the loan and that this feature would give access to home ownership to many for whom the extremely high repayments burden in the first few years of a conventional annuity mortgage is an effective deterrent.

I question the approach of the Government to the matter of alleviating the burden of repayments in the first few years. We considered that the way to tackle that basic problem was to introduce a mortgage subsidy scheme and we did that in April of last year. That is a far more effective and efficient way of tackling this essential feature of the problem of home ownership. I fear that this agency represents no more than the setting up of one more semi-State structure for which there is no need. What the Minister has said today confirmed this view. The agency, if I understand the Minister correctly, are to be used as the vehicle for the raising of funds but the operational work is to be done by the existing SDA loans staffs in the offices of the 41 local authorities throughout the country.

What is the purpose of the agency if their function is merely to raise money from the private sector while continuing to use the existing structure to administer the loans? Surely the type of loan the Minister is talking of could be decided on by way of regulations from the Minister. It is not necessary for the purpose of raising funds by way of bonds to set up this new agency. Already there is in the Office of Public Works legislation providing for the State to raise money in the manner envisaged in this Bill. What the construction industry require at this time is not a new agency but finance. We were told yesterday by the Minister of State at the Department of the Taoiseach that the agency is required urgently to meet a desperate social need and that this measure will enable the Government to establish an agency who will ultimately channel private funds into housing. We were told that there is a serious shortage of funds for housing and that this measure is designed to provide the necessary injection of resources to alleviate the problem. This morning we hear from the Minister that in the first year borrowing will be of the order of from £25 million to £50 million. This would provide funds for about 2,500 loans. There is a far more fundamental funding required, not only of the order of £25 million which is envisaged by the Minister.

The money that is necessary to solve the problems of the construction industry can be got without the necessity of setting up an expensive housing finance agency. Great play has been made by the Minister of the percentage of income to be repaid and he makes a virtue of this repayment over the lifetime of the loan. I should like to quote from an article of 27 September in the Sunday Independent which looked at this agency in the light of announcements which had been made by the then Minister of State at the Department of the Environment. It nails the lie with regard to the virtues that the Minister purports to see in the agency—

It is a great wonder that Margaret Thatcher did not come up with the idea of a housing finance agency on the lines now being proposed by the Government. But perhaps it is even too right-wing conservative and anti-welfare state even for her. The proposed scheme clearly aims at shifting the burden of housing the less-well-off away from the State and onto the shoulders of the less-well-off themselves. And it does so in a slick way which gives an initial impression that the scheme is devised for the benefit of the poor. It isn't and could not possibly claim to be.

It will impose on them far more onerous terms for borrowing money than are available to the better off neighbours. It will saddle them with a mounting debt which will eat up at least 17½ per cent of their gross incomes for 25 years to come. Even in year 25, they will be paying 17½ per cent of their incomes. Those lucky enough to get building society finance, on the other hand, will find their repayments taking a progressively smaller portion of their income. Even assuming a 10 per cent rate of inflation, and say a 12 per cent rate of pay increase, the impact of building society repayments rapidly diminishes with the years.

The carrot in the new scheme is that people, who could not afford the high repayments in the initial years of a building society mortgage, will be lent money under the proposed scheme. The repayments will be pegged at between 17½ and 20 per cent of income — so they will be relatively low at first, so low, in fact, that they will not be enough to meet the interest charges on the borrowed money and the amount outstanding on the loan wil be steadily increasing. In the example alongside it will continue to increase for no less than 17 years.

The figures are staggering — not only because of the light they throw on the actual implications of the proposed scheme but also as an indication of where inflation is leading.

For instance, the man who borrowed £20,000 under the scheme now would pay back no less than £140,000 over the 25 years. In year 24 his repayments would be a massive £14,479 — or £278 a week. And that would be 17½ per cent of his weekly income.

The following example assumes that a man borrows £20,000 under the proposed scheme. At the start he has an income of £5,700 a year and that income goes up slightly faster than inflation — 2 per cent a year faster. It is further assumed that inflation continues at 20 per cent a year for the next two years and then settles down to 10 per cent a year. The interest rate on the loan is assumed to be 2 per cent above the rate of inflation. Repayments are fixed at 17½ per cent of the borrower's income. These last two figures are in line with the Fine Gael policy document of a year ago.

Year 1



Plus interest



Less payments


Year 2



Plus interest



Less payments


Year 3



and so on until...

Year 10



Plus interest



Less payments


Year 11



And onwards, and upwards, until...

Year 17



Plus interest



Less repayments


Year 18



That is the first year in which the repayments more than cover the accumulating interest and the amount due actually starts to fall. The trend continues until—

Year 24



Plus interest



Less payments


Year 25



Plus interest





Loan repaid in full.

So, calculating on fairly conservative figures, assuming an interest rate of only 10 per cent after the first two years, on a £20,000 loan under the scheme suggested by the Government, with minor alterations in the Minister's speech today, the borrower will be repaying about £140,000. That is not a saving to the construction industry or the type of scheme that will attract support from potential home purchasers.

The Fine Gael policy document suggested that a capital requirement of between £160 million and £200 million would be required to finance 8,000 mortgages a year. If we are talking about that type of money we are talking about making substantial inroads into the funds of building societies and other agencies, particularly when one considers that the total amount raised this year on mortgages was £300 million. That will show the dramatic effect this housing agency will have on the overall fixed pool of savings.

I suggest to the Minister that this scheme has not been well thought out in regard to its effect on the construction industry, on existing mortgage finance available in the market place, on the building society movement in general, on the pool of savings and in regard to the Bill's destabilising effect on the whole housing market.

Of course I welcome additional funds for the construction industry but I question whether this is the way to go about it. I wonder if the Minister has thought about the full implications of what he is proposing, not so much in regard to the nature of the new agency but in regard to the total effect of the Bill which the article described as being too right-wing even for Margaret Thatcher.

In welcoming the Bill I should stress that it is an important initiative in providing additional funds in the housing area. For many years there has been a need to provide funds for young people and others who have been seeking to own their own houses but who have found themselves falling between two stools, those with incomes which would enable them to qualify to purchase from local authorities and those with incomes which would enable them to obtain loans of sufficient amounts from building societies In so far as the establishment of this agency will make available funds for people who want to own their homes it is to be welcomed.

During a debate on a Bill like this one should look at the many problems that exist now in the area of house acquisition. I have no doubt that this Bill, though it will make a substantial contribution in the housing area, may leave the need for the House in the not too distant future to look at areas concerned in housing and to ensure that in the long-term a fully co-ordinated approach will be made to housing finance.

Over the years the building societies have made a very important contribution to Irish society. However, with the growth of building societies and of the finances available to them, these societies effectively have enjoyed a monoply position. The manner in which the building societies are operated today gives cause for some concern, and something should be done in this area to look into some of the existing practices in the operations of building societies.

If we can do this at a later stage we may ease the burden that many young couples, particularly, have when they seek to purchase accommodation. Many of those who come within the ambit of qualifying for loans and mortgages from building societies find they have difficulties with these societies. It may not be intended that the proposed housing agency should perform this function, but I should like to see a greater degree of competition built up with the building societies than exists at the moment. The building societies compete for funds by way of deposits and effectively, in theory at least, they compete to provide loans for the general public. We all know that the problem is that there are not sufficient funds in the building societies to enable them to meet all loan applications. We have had the position during the years that the amount that an applicant kept on deposit with a building society prior to being regarded eligible for a loan has been gradually increased. It has gone up in some societies from £500 to as much as £3,000, though there was a time many years ago when it was not necessary to have funds on deposit for any length of time to qualify for a loan. Although in theory the societies are competing for customers, in practice the same interest rates are payable to depositors as by those obtaining loans and the lack of competition between the societies has resulted in the services they offer to the public not being as efficient as they should be or could be.

I should like to see the element of competition being introduced in the future. There are one or two examples which illustrate the steps the societies could take to provide a more efficient service and in so doing enable young couples facing the difficulties and the financial traumas we are all facing at this time to have real savings when purchasing houses.

I want to illustrate one or two areas in this respect. If a building society is to grant a loan for the purchase of a house they will always, as they must do, ensure that the house for which the loan is intended is structurally sound and will provide the society with the degree of security necessary. As a result, the societies, prior to granting loans, will arrange for their own architect or surveyor to go out to examine the house, report back on it and advise the society whether the house will provide proper security.

At present any sensible house buyer, prior to purchasing a house, will have the house surveyed by a surveyor or architect and get a report back to confirm that the house is sound. We have here a duplication in that none of the societies will make the surveyor's or architects's report on a house available to the applicant for a loan. Yet all the societies require applicants for such loans to pay the fees the societies must pay to the architect for making the report for their own purposes. In other words, the applicant for the loan pays the fee of an architect or surveyor to check the house concerned, without having any right to obtain a copy of the report given to the society.

If the applicant is sensible, he or she has to duplicate that expense because the applicants will want to ensure that the house on which they will commit themselves to pay a mortgage for 15 or 20 years is sound. The usual period is 20 years. I see absolutely no reason why there should be this financial duplication. I do not understand why applicants who pay fees to have a house surveyed should not also be entitled to obtain the report on that house. If they had that entitlement the initial expenses incurred when a house is being purchased, not just in the area of the actual price of the house, could be reduced by something between £70 and £100, which is a substantial sum.

It is even more ironic that the building societies do not make these reports available in the light of a recent court case in England in which it was held that, if a report came back suggesting that a house was structurally unsound but nevertheless it could still provide sufficient security for the society and subsequently a real problem arose with the house, the borrowers could hold the society responsible for not advising them of the difficulties.

Building societies in Ireland have not yet come to terms with that problem. If there was a real level of competition between the societies, they would quite happily make these reports available to their applicants for loans, who are, effectively, their customers. That is a problem at the moment. People applying for loans feel dependent on the goodwill of the building societies, rather than the building societies feeling they have to compete for business and customers and that they have to provide an efficient service.

Another area in which there is duplication which adds to the cost of the purchase of a house is the area of legal fees. If a loan or a mortgage is being obtained, the purchaser will not only have to pay the fees of his own solicitor, but also normally the legal fees of the building society for the preparation of the mortgage. There is a need to have another look at this. There is a need to examine seriously whether there should be a duplication of work in these areas.

When applications for loans are being processed there is a different legal interest between the society and the applicant and it is necessary for both sides to ensure that their legal rights are protected. Much of the legal work done on these applications is duplicated and, as a consequence, the people who are suffering are those seeking to obtain loans from societies. This is another area which should be looked at to see if some method could be introduced to reduce the cost of the duplication involved.

A third area which would not be a problem if there were a real level of competition between building societies is the area of delays in processing loan applications and making loan cheques available. A substantial number of applicants for loans to building societies find that they have to close the sale of a house, complete the purchase, and go on bridging finance. Delays of one, two or three months may occur before the building society loan cheque is made available to them.

This has a number of consequences. The first is that the people buying the houses, who at this stage will have been approved for a loan, will find that the cheque is not made available to them and, for a period of time, they have to pay interest at a higher level to the banks, who have given them bridging finance. The interest payments incurred normally will be substantially greater than the payments which would have been made if the loan cheque had come through quicker. There is a failure on the part of the building societies, and to some extent it is fair to say on the part of lawyers processing mortgages for building societies, to understand the true effects and the difficulties involved for young people when delays occur in the provision of the loan cheques.

It does not require legislation to change that. It requires a change of attitude on the part of those processing these loan applications. If we had a degree of competition in this area, it would be dealt with quickly and come to terms with quickly. Where we have what is effectively a monopoly situation in which the customers are dependent on the societies rather than the other way around, there is no incentive for the building societies to deal with these matters more quickly.

I want to make a plea in this House to the societies to do what they can to speed up the process between the time when a loan is formally approved and the time when the loan cheque is made available. I wonder whether the societies could not play a role in the provision of bridging finance if it is still necessary. In reality, if the societies came to terms with the problem of making the loan cheques available, we could cut out the necessity for bridging finance in the vast majority of house purchases. In so doing, effectively we would be realising moneys the banks are using in this area for use in other areas. This is relevant not merely in the area of house purchase, because it would have implications for our economy. As yet it has not been tackled seriously or pursued by the building societies. I hope they will look at it seriously.

At present, as we all know, there is a major housing problem. It is clearly illustrated in Dublin by the number of applicants for houses both on the Dublin Corporation list and the Dublin County Council housing list. At present Dublin Corporation have approximately 7,000 applicants on their housing list who have been approved as housing applicants. Dublin County Council have approximately 1,800 applicants approved. On average in recent years Dublin Corporation built 1,500 houses per year and Dublin County Council built approximately 600 houses per year. On the rate of building it is clear that, unless there is a dramatic change in our circumstances, the number of houses being built will be much less than the number of applicants in need of housing.

This problem is not merely concerned with making finance available. It also has to do with the whole policy in the area of housing. We need to look at this in a comprehensive fashion and see how the different finances available and the existing legislation are interacting. I have no doubt that many of the applicants on the Dublin Corporation list and on the Dublin County Council list — as a member of Dublin County Council I deal continuously with people on the council housing list — under the terms of the legislation to be enacted to provide the Housing Finance Agency, will find themselves in a situation, when the agency becomes operative, where they will be able to raise funds to enable them to purchase accommodation.

I believe we will discover that when this agency is fully operative it will result in a reduction in the housing lists applications as they obtain. I have no doubt that the provision of funds by this agency will alleviate some of the difficulties encountered in these areas. But we must look at the problem in a comprehensive way. There are problems being encountered with the existing local authority loans scheme which could arise, not in the context of the Housing Finance Agency but in the way in which it intertwines with other schemes. These problems should be looked at but cannot be dealt with in the context of this Bill. There are anomalies warranting serious examination, which have built up because our housing policy over the years has developed on a piecemeal basis. For example, as matters stand at present, a housing applicant to a local authority will be awarded points which will qualify that applicant for allocation of a house on a variety of grounds. One matter not looked at in the context of determining whether an applicant qualifies for tenancy of a local authority house — as opposed to qualifying for a loan to purchase a house — is the applicant's income; there is no income limit. If somebody is living in unsuitable housing accommodation, in overcrowded conditions, they may have sufficient points to be allocated a local authority house regardless of their income.

Under the present local authority housing scheme, if somebody has an income in excess of £7,000 such person will not qualify for a local authority loan. Under the Housing Finance Agency the income limit will be increased to £9,000. However, at present there is this anomaly that if somebody applies, say, to Dublin County Council for a loan for the purchase of a house, if they have an income of, say, £7,500, they will be turned down because their income is £500 in excess of the present limit. A similar situation could arise under the new Bill, in that somebody could apply for a loan with an income of £9,500 instead of £9,000. What can such an applicant then do? If such an applicant is in Dublin County Council offices he or she can go out of one office in which they made their application for a loan and go into the office next door and apply for tenancy of a Dublin County Council house. If they can show that their conditions are such as to warrant their being allocated a house, when an allocations meeting of the council occurs, they may very well have sufficient points to warrant their being given a house by way of tenancy, despite the fact that their income was such that they could not obtain a loan from the council to purchase a house themselves.

The situation becomes even more ludicrous if one examines what would happen to the person who has been refused a council loan but who finds he has been allocated tenancy of a house. When that person moves into a local authority house he may then, under the purchase scheme for local authority tenants, find that he can get a loan to purchase the House in respect of which he was originally allocated tenancy, despite the fact that that applicant originally could not get a loan to purchase a house — that was not a local authority house — from the council. The effect of this is that in some instances local authority houses are being taken up whereas if loans were available, possibly applicants would not have needed to go into local authority housing.

The other problem is the provision of a more equitable, sensible and co-ordinated system to deal with this problem. If we are to have an equitable housing policy, if there are financial limits laid down determining the circumstances in which somebody may be granted either a local authority loan or a loan through the Housing Finance Agency, surely there should also be income limits on the granting of local authority housing by way of tenancy. That is something that should be seriously examined. It must be done on the clear understanding and in full consciousness of the necessity to plan the approach and ensure that nothing is done or measures taken to deprive people genuinely in need of housing. But there is no logic in having financial limits for determining whether one qualifies for a local authority loan for the purchase of a house or whether one qualifies for a loan through the Housing Finance Agency — which initially will come through the local authorities — without having such limits on applicants for tenancies of local authority housing.

I have not gone into the details of the Bill. That would be more appropriate at a later stage. I have no doubt that its implementation will be much welcomed by many young people who find themselves at present in a limbo situation unable to obtain a local authority loan but who are not in such financial circumstances as would enable them to obtain a building society loan. I believe that the implementation of the provisions of this Bill will act as a stimulus to the building industry and as a catalyst for the building of more houses so badly needed.

I must say something about the criticism voiced by Deputy Raphael Burke. Indeed it is a general point which is relevant to this Bill also, that throughout this Dáil session there has been criticism levied at legislation placed before the House. It is the function of an Opposition to criticise legislation, to seek to improve it, if it can be improved. But I would submit that it is the function of a credible Opposition, if they do not agree with measures before the House but agree that a problem exists — and I think all Members of the House would agree, no matter what their political persuasion, that there is a problem in the area of the provision of houses for our young people — to provide credible alternatives to deal with that problem if they feel the legislation before the House is not tackling it properly. Like so much which has been said about other Bills in other areas it is very easy to knock theoretical holes in legislation, easy to undertake an academic exercise and transpose it into appearing to be a valid criticism of a measure introduced. What is of more relevance is to produce the policies with which to deal with the realities of young people's problems at present. I have not yet heard a Member opposite do that in the context of this Bill or any other. I would draw the attention of the House to a speech by a Member opposite last week made in the context of the Rent Restrictions Bill. On that occasion Deputy Séamus Brennan — and I think I would be correct in paraphrasing him in this way — maintained that all parties in this House over the years had not truly come to terms with the housing problem. He recognised the existence of a major problem. I would put it to Members opposite — as I have done on other legislation — produce the policies. If you contend this is not the correct way in which to deal with it, then say how we are to deal with it, or are we simply to say: we wash our hands of the problem, we will not look at it and will not do anything about it; we will keep things running as they were before? If their criticism is to be given any degree of credibility I would submit that they must and should produce alternative policies to this House.

I believe that the Housing Finance Agency will make a major contribution to solving what is a major problem. I believe there are other steps that should be taken to deal with the problem of housing. I believe also that if this House fails to come to terms with this problem the young people of Ireland will lose whatever faith they retain in politicians in this country.

Having got that lecture from the previous speaker I want to assure him that, on this side of the House, we are examining this Bill to see what it can do for the future in respect of those who may require mortgages for the provision of houses for themselves. We are examining the Bill also in order to see what its provisions can do for the building construction industry.

I cannot see what this piece of legislation will do to alleviate the problems in this area. There is the problem of giving the construction industry the impetus it needs in order to provide employment and to take itself out of the difficult situation in which it is at present. Above all, we must examine this legislation from the point of view of what it will do for people who require mortgages in order to provide themselves with homes. It has always been our policy to help people to have a home of their own, to take pride in their home, to look after the maintenance of it and not to be dependent on the local authority to do this for them. Of course, there will always be many people who will, of necessity, have to be rehoused by local authorities but as far as possible we should give every assistance to those people who require a home and are in a position to provide it.

It has been mentioned that at present there is no income limit to qualify for a housing authority list. I would never say that income should be the sole criterion to qualify a person for rehousing. There are other considerations to be taken into account, such as their present accommodation. There are also other problems and difficulties people may have which would put them in a position of not being able to provide a house of their own, even with the assistance available. I do not believe that being over a certain income level should debar people from being on a housing authority list. This would be bad policy and would create tremendous hardship. At present the managers of local authorities take the income of a person into consideration. For example, if there is somebody on a much lower income and perhaps living in similar unsuitable conditions, they would decide that the person on the higher income would be in a better position to provide themselves with a home. However, there should not be an income limit to qualify to go on a housing list.

I cannot see what this Bill will do for people who require a house of their own. I can see that this agency, when set up, will be in a position to provide extra financial aid. That seems to be the purpose of it. However, we must remember that it will be going into competition with other people in that field who require money from the financial institutions and that the money available for investment is limited. Money raised by this finance agency will make money scarce for other activities. The building societies have been doing a good job down through the years. I realise that there are many people who find it difficult to qualify for a loan at present. I note that the local authorities will be the people to continue to operate this scheme and I agree that they have been doing a good job. I believe they could continue to meet the present need provided the finance was made available to them. Finance is the difficulty. I cannot see that in the first year of operation a sum of £25 million, or even a sum of £50 million, will do anything to relieve the situation in which we find ourselves. I had hoped that the Bill would give the necessary stimulus to the construction industry and that it would do far more for young people who want to provide themselves with a home.

Under this Bill the easing of the repayments will be in the early years. This is very welcome and will encourage people to borrow, but as the years go on the repayments will increase. This is where I would take issue with this Bill. People will be encouraged to borrow money because of the easing of the repayments in the early years. Later they may have a family, which makes their financial situation less favourable. The house too will begin to deteriorate and the cost of upkeep will increase. Therefore, they are facing an increase in the cost of living, the cost of having a family and the cost of repairs to the house.

This Bill runs counter to the policy of all the lending institutions in this market at present. Up to now repayments have decreased as time has gone on. Under this Bill repayments are increasing and increasing at a time when the borrower has extra commitments to meet. I believe there will be difficulties and problems for the borrower. When they examine this Bill they will find that there is nothing in it for them over and above what is provided by the lending agencies at present. Under the existing system it is only necessary to make sufficient funds available and to increase qualifying income in accordance with inflation.

The new scheme provides a means of raising money but it will be very expensive for the borrower and may lead him into great trouble. Financial institutions will not make money available without a worthwhile return and this return will have to come from the borrower because the agency will be self-financing. The scheme may prove to be a millstone around the necks of borrowers because their commitments will increase as time goes on. In the early years of marriage when a couple have children costs increase enormously but later they will have to pay education and other costs and at that time their repayments under this new scheme will also increase. Under the present system repayments diminish as a proportion of income as the years pass and this is an inducement to people to borrow, but this new scheme will make it more difficult for them in later years.

I had hoped that this Bill would provide some assistance for the construction industry and for those who want to own their own homes, but unfortunately it will not do these things. The Bill is a disappointment to those who had hoped that their lot would be improved by it. We may find that there will be no demand for this new scheme, as in the case of the £9.60 for housewives. This would be disastrous because we all realise that there is a need to give some assistance to the construction industry. Because of our growing population, the increasing standard of living, the necessity to take people off local housing lists and the desire of people to have a home of their own, we had hoped that something definite would be done. Unfortunately this Bill will not bring relief to people who really need it and it is a great disappointment.

I congratulate the Minister on a very imaginative and non-legalistic approach to the Housing Finance Agency. It is clear that he has gone out of his way to make the scheme as available as possible to a very wide number of people and there is a marked absence of narrowness in the interpretation of eligibility. This is probably one of the most imaginative measures I have seen during my time as a public representative at local and national level.

The single biggest problem with which we have to deal at our weekly advice clinics is not, as is often thought, social welfare but housing. An enormous number of people come to us thinking that somehow we can wave a magic wand and take them out of a desperate situation in which they are forced to live with parents or parents-in-law or have to leave a flat because they have had a child. Given the rate of growth of our population, this problem will become even graver in the future. This Bill proposes to make more money available for housing and to enable repayments to be made on a pay-related basis. It is something which has been needed for some time.

My colleague, Deputy Shatter, referred to housing projects in the Dublin city area. Dublin Corporation are building between 1,500 and 1,600 houses per year, but there are about 6,000 applicants on the housing list. I accept that some of those on the list should not be there but people will apply under a scheme when there is no income restriction, even though they do not need local authority housing. Apart from those people, there is a sizeable number on the list who genuinely need houses and will not be reached. These people are in the category covered by this Bill and will benefit greatly from it. The new scheme will result in people coming off the local authority housing lists thereby enabling local authorities to house more worthy cases and reduce the waiting list. Those objectives are approached very imaginatively and very courageously in this Bill.

The reason there are so many people on the housing lists or seeking to borrow at a rate they can repay is that through the years there has not been a real effort to tackle the problem of housing on a realistic basis. If the steps the Minister is taking now had been taken by the last administration, or by the previous Coalition, we might not have the present situation. Urgent steps should be taken to remedy the situation because there has not been a concerted effort to deal with the problem in a realistic way over the last decade.

Much has been said about the pay-related element and the sections of this Bill dealing with repayments being spread evenly over a longer period. A Deputy mentioned yesterday that a person could be repaying £140,000 over a long period for a house, and if one looks at any mortgage repayments one will find that over a 25-year period the repayments are very substantial. If one was to discount the repayments to be made under this scheme by the rate of inflation over a 25-year period, there would be very little difference between the mortgage figure and the repayment figure mentioned here. I do not believe the difference would be significant and it certainly would not be as big as the Opposition allege.

I am pleased to see that the housing agency will raise the funds required under this Bill and that local authorities will carry out the scheme. This is a very good move because the local authorities have people who are experienced in administering such a scheme. This will also enable public representatives at local level to monitor and comment on the scheme.

I am very critical of the rigid approach taken by local authorities in cases where young people are buying local authority houses. Sometimes the authority insist that minor repairs, such as gate pillars or gates, be repaired before the local authority loan is granted. Very often this means the couple may have to stay on bridging finance for two or three months until these repairs are carried out. These people should be allowed move into their houses and have these repairs done as they go along. Sometimes they might even be able to carry them out themselves. The procedure being followed by the local authorities is unnecessary, does not help to reduce the numbers on our housing lists and to get as many people as possible into decent housing. If the local authorities carry out this scheme, I hope they will not be narrow in their approach. They should encourage people to move into their houses and then carry out the minor repairs needed.

Somebody borrowing under this scheme could find that their repayment rates could be as low as 12 per cent, or as high as 17 per cent, depending on the number of times their income they are borrowing. At present building societies are insisting that people must pay somewhere in the region of 45 per cent of their incomes. This is totally unacceptable. This is happening in the early years when people are experiencing great difficulties. It can be argued that in later years, when there are children, families are under great financial pressure but I am talking about the initial problems of getting a place to live. The building societies are not helping couples to get over this difficult period. They should spread the repayments over a longer period because this would have a very beneficial effect.

We have a housing crisis in Dublin which has been caused partly by people living in local authority houses who should not be. I said this last week elsewhere and I want to put it on the record of this House. In many cases local authority houses are made available to people who are genuinely in need, but in some cases they are not in need. It must be remembered that income is not taken into consideration. Presumably, these people have been housed because they needed it, but in a few years time a man might get promotion and his income could be much higher. Because of the rent restriction, a person earning £20,000 a year could be living in a local authority house and his rent would be very small, possibly in single figures. That is an absurd situation, especially when one considers the present housing crisis in Dublin.

People who can afford it should be encouraged to buy their own houses and this Bill will do that. The people most in need of houses should be allocated local authority houses. There has been a great deal of talk about money going down the drain. There are many couples paying £30 a week for one room. Many people come to me looking for flats and they are prepared to pay up to £30 a week, and many of these people have very small incomes. That is money they will never recover but under this scheme that money could easily provide these people with houses. The houses would appreciate; they would belong to the couples and they would be spacious, not one-roomed hovels.

This Bill aims to increase the total amount of funds available for housing. The biggest builder of local authority houses is Dublin Corporation. Are we getting value for money? If we were to take into consideration the site cost, development costs, building costs and overheads, we would find local authorities are paying more for local authority houses than the people in the private sector. This is a crazy situation and a terrible waste of public funds. I do not believe officials of local authorities would accept that statement but if an independent examination was carried out of this area it would be found that finance is wasted. Local authorities in any event do not build the houses but engage companies through tender to build for them. If they were to purchase houses already built by private builders an enormous saving could be made. To put it another way, for the same amount of money spent on house building they could probably get a greater number of houses made available to them.

There is an urgent need to pass this Bill before Christmas. I do not like the idea of Bills being rushed through this House but when there is a breakdown in communication or a clash, such things can occur. Nevertheless, the legislation is urgently needed. I welcome the fact that it will be passed before Christmas although I regret that it must be passed in this manner. If we are to delay any longer it will take about six months to implement the Bill and that will mean that fewer people will be housed. In the area of housing finance the performance of the banks has probably been the least helpful and most selfish. Banks who are making substantial profits have not sought to do anything to ease the problem, a problem they have contributed to in some way by bringing many people from outside regions to Dublin to work in the banks, thereby taking up private accommodation. The banks have not in any way made a realistic contribution by way of funds to deal with this problem and the paltry sum available was as a result of pressure from the Government.

The attitude of the banks in the area of bridging finance is also regrettable. Their responsibility in this regard must be seriously brought home to them. I hope that next year the Government will be able to persuade them that it is necessary for them to take their responsibility more seriously and not always be grabbing for profits.

It is proposed under the Bill to raise between £25 million and £50 million for mortgage finance. That will be an extra amount of money for houses. If the banks, insurance companies and building societies make the maximum amount of funds at their disposal available together with this effort by the Government a real inroad can be made on the housing crisis in Dublin city. The exorbitant short-term rates being charged for bridging finance should be examined as a matter of urgency and I hope the Minister when he meets the banks, as he does from time to time, will take this matter up with them. He should ask the banks to adopt a more serious community-orientated approach to the problem of housing.

For the first time ever institutional funds not otherwise available will be tapped for housing. That is a welcome innovation which should have widespread implications for the future funding of similar projects. The alternative to creating more funds for housing and as a result more housing, is costly. We know from our work as public representatives the amount of overcrowding that exists in many houses. We are aware of the problems that have been created by vandalism because some parents are not able to cope, with the result that children get out of parental control. We are aware of the problem of marital breakdowns which is enormous in the city and is probably unprecedented in any previous decade. We are aware of the damage to health that overcrowding causes with people taking valium like smarties. It is a common thing to be told by people on the housing list that they are taking valium daily. That is one of the costs we must bear for not providing proper housing accommodation and it will continue unless the right approach is adopted. The provisions of the Bill represent such a move. I welcome the fact that finance will be made available to single people whether they are about to get married or not. There are many settled people anxious to buy their own homes and that good aim should be recognised. It is expected that in this area there will be sufficient funds available to encourage those people to participate in the scheme. The Minister, in the course of his speech, said that persons qualifying under existing local authority schemes will be given the option of repaying their loans in accordance with the proposed terms of the new scheme. That is another of the innovations which the Minister has written into the Bill. He has approached this matter from a very wide angle. I welcome the fact that limitations have been kept to a minimum and that people in existing local authority schemes will be able to avail of the new scheme if they wish.

Under the new scheme the maximum amount available is being increased from £14,000 to £22,500 and for those in the special category from £18,000 to £27,000. That is a realistic move. The old figures were not realistic or sufficient to enable a person to purchase a house anywhere. The new figures will give people a real opportunity to purchase their own homes. I welcome the fact that the scheme is available to co-operatives. Again, that is indicative of how determined the Government are to make the terms of the scheme widely available. The fact that the new scheme disregards the income of the spouse is also welcome particularly in view of the fact that most of the people in the category we are speaking of probably have two incomes up to the date of marriage, but, thereafter, would have only one income. Working on the basis of one year in arrears that could have an effect on the amount of funds to be made available.

Another important development in the scheme is that a loan applicant, as in the case of SDA loans, will not be required to prove that he cannot obtain a house purchase loan elsewhere. That is another indication of the unusually wide approach being taken by the Minister. Previous contributors to this debate have not mentioned the fact that the scheme will protect the borrower against the short-term effects of loss of income due, for example, to sickness. Somebody has put a lot of thought into the provisions of the Bill because many of the innovations were never thought of before. They are now being brought forward together but can be reviewed as we go along.

The innovations are very welcome and in this particular case very thoughtful. I hope that the scheme will be operative within six months. I understand the Minister's intention is that the agency would commence raising funds within three months and that first applications could be taken within six months. The earlier the agency get under way the better. In common with other semi-State bodies, they should be subject to the usual examination by the Joint Committee on State-Sponsored Bodies so as to ensure that the funds involved are reaching the people the Government intend them to reach.

Deputy Fahey referred to the problem of couples later on in married life having greater commitments than is the case in the early years. The problem is, though, that couples need help to provide a house in the first place and that is why we must help them at that stage. The objection to their contribution being by way of a portion of income is unrealistic. The reverse is the case. Deputy Fahey has referred to a millstone being put around the necks of young couples by way of this means of repayment. That is not true. What we are doing is providing a cure for the ills which a young couple face in trying to set up home. We were told that this approach would not be possible having regard to the various restrictions that apply but we have been able to go ahead with the legislation. Deputy Fahey expressed disappointment with what we are doing. If I were in Fianna Fáil I, too, would be disappointed because that party did not have either the courage or the foresight to introduce a similar Bill a short while ago while in office.

Fianna Fáil remind me somewhat of the late Admiral Doenitz who in the closing days of the German regime assumed Government and proceeded to govern an area of about the size of Bray, appointing various Ministers, including a minister of religion. In their latter days in office Fianna Fáil behaved in a similar fashion. They had lost all sense of reality and should have been able to take their defeat with some semblance of integrity. They have persisted in being obstructive and in failing to put forward any reasonable argument against any of the legislation that we have brought before the House. Privately some members of that Party have admitted that this Bill is very good.

We hear concern being expressed here from time to time about the building industry. Surely this is not to be taken as serious concern when at the same time these people say that a Bill to make available between £25 million and £30 million of additional funds will curtail activity in this sector. This legislation will provide a lift for the building industry and will help that industry not only to tackle the problem of housing but also to provide more employment.

I welcome the Bill and I hope that within a short time it will bear fruit in terms of the moneys that will be available to those many people who are in need of housing finance.

I can assure both Deputies Mitchell and Shatter that regardless of whether people say in private that this Bill is good, I consider the idea behind it to be good. However, there are certain aspects of it that I will have difficulty in accepting. Consequently, if we are allowed to table amendments to it we shall do so.

Deputy Shatter does not believe that during his time in the House we have done anything constructive. I can assure him that we asked for this Bill to be held over in order to give us time to table amendments to some of the more serious aspects of it. It was on those grounds that we opposed the rushing through not only of this Bill but of other pieces of legislation before the House this week. As an Opposition we have not only a right but a duty to table amendments when we consider them to be necessary. It is our duty to be constructive and helpful in our opposition and to endeavour to improve the various pieces of legislation coming before the House.

The housing problem is serious throughout the country but particularly so in our cities. This problem is the cause of many people, women in particular, having to seek psychiatric treatment. It contributes also to a large extent to the breakdown of marriages. Local authority housing is not available to many young couples who find it impossible to provide homes for themselves. In so far as this Bill will ease the burden for those young people it is welcome and one that a realistic politician would not oppose in those terms. The problem of marital breakdown has serious implications for all of us. It is the biggest social problem that we as politicians must face. We can deal with it to some extent by providing homes for people because if people have proper living accommodation they have the basis of a good marriage and of proper family life.

In the context of providing finance for housing we must have regard to the fact that in the last number of years house prices have increased enormously. This has put the cost of a house well beyond the means of a person on an average salary. An ordinary semi-detached house anywhere around this city is costing up to £30,000. Neither married couples nor single people can afford the repayments that the raising of such money would involve. That is why we must look realistically at the provision of necessary legislation which will control the cost of housing to some extent. A major input in this regard is the high cost of building land particularly around our cities. As a member of a local authority I have been involved for some months past in rezoning land plans around the city so as to provide additional land both for industry and for housing. That is part of my function as a member of a local authority but it is my duty also as a legislator to try to ensure that those who reap large profits are taxed fairly and that they make their contribution to maintaining and ensuring that the high cost of houses is not solely the burden of the people who have to buy them. We must bring in necessary legislation to ensure that we control the very high cost of building land which adds to the cost of houses and provide additional finance to ease the burden on people buying their own homes. If that legislation involves constitutional change in the form of implementing the Kenny Report, that might be a more worthwhile crusade than those we have been having for the past while.

Deputy Shatter referred to the number of people on the local authority housing list in Dublin. There are 7,000 applications on the Dublin Corporation housing list and there are 1,800 applications on the Dublin County Council housing list. Last year Dublin Corporation built 1,500 houses and Dublin County Council built 600 houses. Roughly less than one-third of the people who are currently on the local authority housing lists were able to be facilitated in the past year. If these numbers continue to grow it will be beyond the reach of all of us to find a solution. I believe many of these people could provide homes for themselves if they were encouraged to do so. It is not just a matter of providing finance, it is also a question of providing them with the necessary incentives. There are many people who do not believe it is their duty to provide homes for themselves. They believe this onus should fall on the State and, irrespective of their income, they would never dream of getting the money together to provide themselves with a home. Many of the people who come to Dublin County Council looking for houses could well afford to provide houses for themselves. They are earning salaries far in excess of the higher salary requirement for an SDA loan at present and in excess of the £9,000 which is the maximum amount which someone can earn in order to qualify for a loan from the Housing Finance Agency. We will have to look realistically at our whole letting scheme to ensure that those who can afford to pay for their own houses should have to buy them. We cannot afford to subsidise people who are earning up to £20,000 per annum. They are preventing people who earn very low incomes and the unemployed from getting local authority housing. I support the idea put forward by Deputy Shatter and Deputy Mitchell that the matter of a means test for some local authority housing should be investigated.

Some of the items in the Housing Finance Bill must be questioned. Deputy Shatter criticised us for opposing some of the measures in the Bill. We are not alone in criticising some of the measures. In the Sunday Independent of 27 September Colm Rapple, in a very extensive article on the proposed Housing Finance Agency, outlined his criticism of the measures. He particularly criticised the fact that a £20,000 mortgage over 25 years would cost the borrower something like £140,000. Is that a realistic proposition for any Government to expect us to accept willingly?

I see the need for a Housing Finance Agency and for going beyond all reasonable limits to provide housing, especially for our young people, but I cannot accept that the lender's money will be inflation-linked and that they will also have an increase in the real interest rate. We will fuel the rate of inflation and the borrowers, who are getting mortgages from the housing agency, will be heavily subsidising the big finance houses. That is a disgrace. At present it does not happen with building societies and it should not happen in this case either. It is wrong that people trying to repay mortgages should be financing the lending institutions and big finance houses. I hope that the money which these finance houses will provide for this housing agency will not be diverting money from other very important sectors of the economy. I could not support the idea that the person with a mortgage should be subsidising the finance institutions, who should be helping to ease the burden on mortgage holders.

Deputy Shatter referred quite extensively to the fact that many mortgage holders, whose loans are approved by building societies, have to wait for a long time before they get their cheque. This entails having to enter into agreements with banks and other institutions to get bridging loans which can be very costly. I do not see why the building societies cannot sort out all the legal problems before the cheque is sent out. When the loan is approved the money should be sent to the applicant immediately. I should like the Minister and the Government to investigate the possibility of the building societies speeding up the process between approving the loan and the granting of the cheque. I hope the Housing Finance Agency, when they are approving loans, will not have long delays between the approval notice and the person getting the money. This is a very heavy burden, as it is very difficult for young couples to get bridging loans, especially as many of them do not have bank accounts, having invested their money in building societies.

One of the biggest scandals at present is the amount of money which solicitors are making in conveyancing fees. In many cases they run into hundreds of pounds. You can have a solicitor doing the work for one house, the next hundred houses in the estate are exactly the same and yet he charges the same amount, when all that is involved is duplication of the work he has originally done. We should investigate the possibility of cutting down costs here because these legal costs can run into sums of up to £1,000 between paying the building societies and other costs to the Housing Finance Agency, paying their own solicitor and possibly for a report by an engineer or architect. These hidden costs are placing a severe burden on many people and solicitors' fees are disgracefully high.

We should also be considering the type of houses we build. We have the highest home ownership in Western Europe but everyone should not have to buy a three or four bedroomed semi-detached house with a front and back garden because many people cannot really afford to do this. There should be smaller house units, especially for single people and for young married couples in the initial stages of their marriage. These units would be cheaper to provide and would be sufficient for a young couple in the early years of marriage. As their needs and their money increase they could move on to a bigger house. There are apartments in Dublin but these are beyond the reach of people on normal incomes. I do not want another Ballymun, but I think these low density, not high rise, smaller units could be provided in many housing estates. They would provide much needed housing for single people, elderly people and widows or for couples who have not families in the first years of their marriage. It would ease the burden and provide badly needed cheaper and more convenient accommodation.

Finance cannot be provided without first investigating the high cost and the type of housing units, but in overall housing policy I hope that the Government will look into the question of stamp duty on secondhand houses for first buyers. This duty places an extremely high burden on many first-time house buyers. It means that many young couples who might prefer to live closer to the city centre in Dublin, because of the convenience from the point of view of work and for other reasons, are put off because of the very high stamp duty on secondhand houses. There might be a legal problem about reviewing it, but it is worth investigating.

The idea of the agency is a good one. I would never criticise proposals by any Government to provide housing finance for people trying to buy homes for themselves, but I honestly do not see any great difference in the proposed scheme from the present one operated by the local authorities. There is a difference in income requirements. It goes from £7,000 to £9,000. The amount of money provided goes from £14,000 to £20,000 and for the second category in the housing list the amount will go from £18,000 to £27,000.

Over and above that I do not see any great novel idea in it, such as Deputy Mitchell spoke about. It is not the great imaginative thing I thought it would be. It does not look at new methods of financing house purchase. It is similar to the scheme in operation, the one big difference being that the scheme will be financed by private investment and not to any great extent by the Government. In these circumstances will the Government try to get off the hook in a few years' time by getting private investors to plough their money in and get paid interest? I wonder will the State contribution be increased in real terms? Will there be an increase in the amount of money at the moment invested by local authorities?

The existing local authority scheme, although restricted, is a good one. In that respect I should like to take up Deputy Shatter on his criticism of the Fianna Fáil Government in regard to their housing policy. We came a long way. We increased substantially the SDA loans, we increased the income limits from £5,000 to £7,000, we increased the amount of finance available, we provided the £3,000 mortgage subsidy for first-time house buyers and the £1,000 new house grants. They were new and imaginative schemes. They may not have been sufficient but they went a long way to ease the burden of providing people with their own houses. The mortgage subsidy scheme was worthwhile.

I should like to refer to the idea about having the mortgages related to income streams of the applicants. That is a good thing because it is terrible to think that in the first few years of marriage couples have to try to provide houses, furnish them, try to run cars and engage in all the other expensive enterprises involved in getting homes together. Some such couples at the moment are paying up to £400 a month in repayments. Perhaps after 15 years, as their incomes increase, they could afford to move to much bigger houses; but in the early years of marriage it is important that these burdens should be eased. It is important for people not only to have houses of their own but to be able to furnish them and at the same time live at a proper standard. For instance, in many cases today some couples have to sacrifice the quality of their food: many of them eat cheap processed foods because they cannot afford proper food or clothing while they are repaying high mortgage rates. Therefore, the idea of linking mortgage repayment with income streams is a good one.

However, I am upset to think that mortgage repayments will not be linked with income streams alone but only as a percentage. In other words, in the early years of the life of the mortgage, if the mortgage is, say, for £20,000, there is not a decided set figure of repayment. It is a fluctuating rate of interest, changing from time to time as inflation changes, and it will be difficult for a couple to predict the kind of payments they will have to make from year to year. It will worry people who would like to plan in advance. For instance, if people have children they would like to provide for their education when they are 16 or 17 years of age. However, this type of mortgage repayment will inhibit them.

Fianna Fáil are not opposed to the setting up of the housing agency. As a party throughout the years we have tried to do everything possible to ease the burden on young couples trying to buy houses. I am particularly pleased that the Bill does not propose to discriminate against single people. It was a disgrace that the £3,000 mortgage subsidy was removed from single people. As a single person, I have to say that single people require housing. Many of them live with elderly relatives and some of them have gone past the stage of getting married, even if they wanted to. Suddenly they find themselves wanting to buy houses, but that is not easy on one income. House prices these days are geared to two-income families. Therefore we should have tried to ease the burden on second category single people. Widows and others have been shamefully discriminated against by the Government in regard to mortgage subsidies. I spoke of secondhand houses earlier and I should like to see the Government extending to them the mortgage subsidy and the £1,000 house grant. We want to have a living inner city in Dublin and the extension of these schemes to secondhand houses would help to achieve that. We must make it possible for younger people, in particular, to live in our inner cities. The mortgage subsidy should be on the house and not on the mortgage itself. That subsidy was a good idea but it is time to extend it to people buying secondhand houses.

There will be many other matters we will be taking up on Committee Stage. We are particularly worried about the part of the Bill which provides that the mortgage holder will be financing and subsidising the lenders, particularly the big finance houses. That position does not exist vis-à-vis the building societies. Many people will resent having to pay mortgage rates in excess of the inflation rate in order to make money for big finance agencies. Banks, insurance companies and the big finance houses could be playing a far greater role in the provision of money towards housing. The banks, particularly, are making substantial profits and we should examine the possibility of forcing them to invest substantial amounts in this housing agency or other worthwhile State investments. I do not see anything that could be more worthwhile than providing housing for our people. Such institutions first of all should be providing houses for their employees. Generally, private enterprise could play a greater role in our housing development.

By and large the idea is a good one. It has the general support of all sides of this House. We would not want in any way to prevent this Government or any other Government from getting on with the job of providing housing and housing finance for so many people who are on the local authority housing list and who are living in very bad circumstances. This leads to severe psychiatric illness and a high rate of marital breakdowns particularly among young people. This is particularly true of people on local authority housing lists who are living with in-laws and other members of their families.

In many cases the husbands and wives are separated. This places a very grave burden on them and puts great stress on their marriage. From that point of view it is important to do everything possible to provide our young people, and people generally, with the necessary finance for housing and the incentives and education to encourage them to own their own homes and to take a pride in owning their own homes. If others can afford to pay for their own homes they should make an input, and they should not expect the State to hand them out a house literally for nothing, as happens in many cases.

I support this very socially important Bill. I have a particular interest in it because I was involved in it as Minister of State at the Department of the Environment when I met representatives of the association dealing with pension funds and the association dealing with life offices with a view to getting a commitment from them to finance this agency. I was very happy with the response I got. I am hopeful that this agency will be a big success. It must be a big success because of the need which exists for it.

The Opposition felt they were not getting enough time to discuss this Bill. As a Whip I felt we could not leave this Bill over until next year because of its importance and because of the great social need for housing. There was no element of trying to push the Bill through for any reason other than to make funds available. The Opposition are aware that finance for housing, as for most other things, is a scarce commodity. Housing is a priority for couples about to start married life. We could let nothing prevent us from getting this Bill on the Statute Book to get this agency started immediately and get our index-linked bonds on the market and take up a source of income which heretofore was not tapped.

This is a third arm of housing financing. We have the building societies who have been doing an important and first-class job. They may have their critics, but I am not a critic of the building societies. We also have the SDA scheme, which is limited in its operation. There was a need to cater for the income limit between £7,000 and £9,000. Quite a number of people were finding it hard to get building society loans and, where they could get them, the cost of financing them was beyond their means. This agency is one of our reforming policies. This was uppermost in our minds because we must remember that, if we are providing houses for people, they must be able to afford them.

Up to now many people had to take on second jobs. Wives had to go out to work and leave young children to help meet their repayments. This will remove that type of pressure. There will not be this terrible pressure of the mortgage repayments coming in on a monthly basis and, in some cases, almost outstripping the earning power of the principal earner. If people borrow three times the amount of their income they will pay 18 per cent only, which is very reasonable. It is generally acknowledged that 20 per cent to 25 per cent is what we should be paying. We are bringing in this scheme to ensure that it will not cost more than that. If people borrow two-and-a-half their income the rate will be down to 16 per cent.

People can base their mortgage repayments on their incomes. This is a real contribution to family life. Pressures on marriages because of high repayments are often the cause of running the marriage onto the rocks. By and large, financial difficulties cause serious problems. As well as making money available for housing, this Bill has a great social content built into it. It will remove the terrible pressures and strains on people. Therefore this Bill has a lot to commend it.

In the first year we will be making an injection of between £25 million and £50 million. This is a new source of revenue for the house construction and building programme. I am glad to see that the CIF have made it a top priority that this Bill should be passed. They see the merit in it. I do not know whether I am telling tales out of school, but they were the first to indicate that they want to invest in it. They want to put their money where their mouth is. To me that is a sure sign of the industry's confidence in this Government's Bill. It will provide employment. It will develop the housing industry to a far greater extent. It will bring it within the scope of many more people.

There are people on local authority housing lists who, although they want to buy a home of their own, because repayments are too high, are debarred from so doing and instead must line up in the housing queues of local authorities whilst living in substandard accommodation or with in-laws, which places tremendous stress and strain on marriages. This Bill opens up for such people the hope of acquiring a home of their own more quickly. There are no restrictions, no barriers once their income is under the limit of £9,000. That is the type of person who more and more is going on to the local authority lists. People who genuinely want to own a home of their own will now be given that opportunity. Judging by the number of inquiries I have been receiving from constituents the response to this Bill has been very encouraging. That was the reason I was anxious that this Bill be passed quickly, for no other reason but to make it more possible for people to acquire a home of their own as quickly as possible and give the building industry a stimulus also.

I was therefore at a loss to discover the opposition there was to taking this Bill. Eventually we were forced to do something, which, as I indicated yesterday, I had not wanted to do, that was to impose an allocation of time motion. We were forced to do so when we saw there was more than a reluctance to the taking of this Bill. I could not under any circumstances see why when I had agreed that even were it not taken this week we would resume two days earlier than the agreed resumption. I made the proposal that we resume on 20 or 21 January to take this Bill to which the response was no, a negative response. When one makes every effort to facilitate the Opposition then, if one does not receive the minimum of co-operation, as we did not, one course only remains open. One cannot contend that this Bill is being rushed through the House. There are ten hours being devoted today to a Second Stage debate. I think the Opposition will be hard put to maintain speakers for the day.

No trouble.

I am glad the Opposition are putting speakers in because I want to see that——

We are very fit.

It is the type of Bill on which we want debate. Ten hours of good, open debate will be very healthy. Tomorrow we will then have 11 hours for the Committee and remaining Stages. Indeed, if Deputies look at the text of the Bill they will see that that affords ample time for a Committee Stage.

There is no opportunity for amendments.

It is open to Deputies to put amendments down. Deputies have had the Bill for over a week now to examine it. They have had plenty of time.

It is difficult to find out what is really in it.

It is not difficult at all. If the Deputy reads it he will find that it is the setting up of a company to raise funds to build houses.

It is what is behind the whole lot that counts.

What is behind it is an endeavour to get people housed who cannot at present afford it and, secondly, to give the construction industry much needed impetus.

Very laudable objectives but how they are achieved is another story. There are some interesting things in it.

Of course there are interesting things in it. We told the Opposition there would be, and they are——

No interruptions, please, Deputies.

The interesting thing is that we will raise substantial sums of money which, in my view, can influence a whole new area of housing finance — tapping this type of institution. If in the future we set up some sort of national trust fund, that could be used. There is a whole area of finance which heretofore was not used or tapped which can be injected into this industry. It must be remembered that the construction industry is a very important one to the country as a whole. Most of its products are manufactured here and it has a high labour content. For that reason alone it is important that we tap and bring in all the finance we can.

The stonewalling by the Opposition amazes me because they have always told us how concerned they were for people in need of homes and housing. It must be said that, while they pay lip service to people's needs, when they left office the whole of the housing area, particularly the public sector, was in a shambles, totally under-financed, indeed so bad that the industry in many local authority areas was on the verge of closing down, there being no money available. One of the first tasks we undertook in our first weeks in Government was to inject £30 million into the housing construction area. Even that injection was insufficient, which will give the House an indication of just how badly the previous Government had performed in the housing area. Certainly they put housing packages together, parcelled them beautifully but forgot to finance them. Rather they presented this beautiful package in April, saying that they would do this, that and the other, without there being any money available. Therefore, it amazes me when I hear people talk about discrimination against single people. What is discrimination? For example, as family living in a tenement room, because of under-financing can be condemned to those conditions for longer periods than they should. Therefore, if one takes finance from one area and puts it into the area of greatest need, surely that would be regarded as the function of any Government? When we found ourselves with no money we had to make hard decisions. It is not easy to make the decision of taking money from one area to give to another but we were not afraid to take such decisions. While these may have been unpopular decisions in many areas they are ones over which I can stand at all times. In times of less financial stringency, of course, we would not cut back on A or B. But when there is a certain sum available and one sees the great need there is within the local authority housing area — with people living literally in hovels awaiting alternative housing — then I believe, as a Government, we are charged with the responsibility of doing something about that. In so doing it is my view that we have alleviated a great deal of the hardship which existed.

We are aware of our obligations to society. In this Bill there are no constraints being placed on single people from applying for housing finance through this agency. The opportunity will will be available to them. That is a clear indication that we know there is a need but where there is a greater need we had to take the action we did take. That is something we will continue to do despite opposition. This legislation will be seen, in the fullness of time, as being very important legislation in the housing area, opening up a whole new avenue of finance. In the Bill we talk in terms of £200 million that will be provided over the years ahead. That will make a real contribution to our housing and to society and help to meet the aspirations and ambitions of our young people. One of the great advantages we have is that we have a young and vibrant population. We must provide them with education, job opportunity and housing. This Bill will give us the impetus to develop the housing area.

Deputy Burke said this could be handled by the existing agencies. It could not, because basically the Government fund local authorities and the building societies are an independent group. This tapping of the institutions is something new. We believe it was necessary to set up an agency and give it statutory authority, an agency that will have the backing and the guarantee of the Government when they are raising finance. That is so important. People have said that the institutions will be getting the going rate. We are in an economic world and we must face economic reality. If we want to attract funds we must make our index-linked bonds attractive. The insurance companies have an obligation to their investors. If we offer index-linked bonds which do not bear comparison the companies just will not invest. It would be meaningless to set up an agency knowing from the first day that it is not competitive, that it will not attract money. The prime function of this agency is to attract funds from the institutions I have mentioned. I believe it will be successful in doing so. I do not agree that it could have been done by the existing agencies.

We are not setting up a whole new empire of bureaucracy. It will be a simple company overseeing and policy making in the area of housing finance. The actual mechanics of it will be handled by the local authorities. It is important that local authorities are used. I am a great believer in local authorities. I think they are the best bastion of democracy. The more responsibility we can give them, the better. They do a magnificent job. We are giving them an opportunity to continue giving the kind of public service they have given this country for so long. They will operate this in the humane way they have always operated things. They have the expertise in dealing with the lending of money because they do the SDA loans. They have the staff for inspection and they have the staff for administration. Something that has bedevilled this country is the fact that if we want to start something we seem to have to start with committees upon committees spreading tentacles throughout the land. I am delighted that this is not happening in this case. We are not setting up a bureaucracy. We have workmanlike, highly expertise management boards defining policy, encouraging investment in the agency so that it can lend funds to the local authorities for them to administer. It is a very simple method when one considers the great expense incurred by building societies with their shops throughout Ireland competing against each other. The cost of organising and developing their funding is high. This will not be expensive.

An important point is that we will not be in competition for building society funds. The building societies have played a magnificent role and it would be a useless exercise if the agency were to tap the resources already supplying the industry. That will not happen. This Bill represents a new concept in relation to housing. For years we were talking about mortgages and how to relate repayments to ability to pay. That has been a topic for the past 15 years and especially during the past five or six years and all sorts of plans were put forward but Governments have not had the will to tackle the problem.

Deputy O'Donoghue praised our policy and said that Fianna Fáil had been examining the matter but they did not go any further because it was a new concept and they were afraid that it might not work because of pitfalls. We saw the merit in this idea and the legislation is before us today in order to fulfil our commitment. While I was Minister of State at the Department of the Environment I was very proud to be associated with this scheme. Fianna Fáil huff and puff and take one step forward and one step backward. Deputy Reynolds said he still does not know what is happening but he will get all the answers.

I hope so.

I assure the Deputy that there are no pitfalls whatever. The agency will borrow and lend to the local authorities and people will be able to borrow three times their income up to £22,500 — and there will be higher income levels for other special cases — at 18 per cent of their income.

The Minister is selling that little bit very well and it will confuse the ordinary person.

It is quite obvious that Deputy Reynolds sees much merit in this Bill and he fears its success in financing the expansion of the building industry. Is that what Fianna Fáil fear? I have spoken to them about it and all they will say is that it seems to be a good idea. They were afraid to let the Bill into the House and I was then convinced more than ever that this legislation must be even better than I had thought because they were so strenuous in their objections. They never gave a good reason for their objections but said they wanted more time. We have given them time and I hope they will use it well. We want to ensure that the Bill is debated and we will be more than amenable to any amendments which may be tabled by the Opposition. There is no question of closed minds on this legislation. If they put down a number of amendments I will be convinced that the Opposition are taking the Bill seriously and that they want it to work. If they do not do so it will strengthen my view that they are afraid of it.

Unfortunately I had to bring in a motion on the allocation of time. In the fullness of time we will see that this is the correct thing to do because we indicated earlier in the year that the legislation would be passed by Christmas. I hope the agency will be set up and people will be availing of funds in the shortest possible time.

Most of the inquiries I received regarding this legislation were from people on the local authority housing list who knew they had not much chance of housing for a considerable time and who saw this measure as an opportunity of getting the necessary finance at the kind of terms that would not impose great pressures on them. That is what makes this such very important legislation. I would ask the Opposition to examine it fully and I would welcome any amendments they might wish to table. I look forward to hearing their views on Committee Stage on various aspects of the Bill and we will then see how interested they are in this matter.

Deputy Harney welcomed the Bill but had certain reservations. I must compliment her on her worthwhile contribution concerning the housing question. As we debate the Bill the Opposition will see its merits. As public representatives we are all especially concerned about housing. A great number of the problems of public representatives relate to housing and providing accommodation.

I have no doubt the Opposition will support this Bill. If they see any problems or if they do not understand this Bill, they should let us know and we will explain it fully. Like any legislation we want to ensure that this Bill is clearly understood and that the reasons behind it are valid and solid. If the Opposition contemplate putting down amendments the earlier we have them the more research we can do on them. We want the Opposition to contribute to this Bill on Committee Stage when we will examine each section. If we feel there is a need for an amendment we will put it down but at the moment we do not see the need. As the debate continues if we get suggestions from the Opposition to improve this Bill, we will be only too happy to accept them.

This is an excellent Bill which will have great social consequences for people in need of housing, people who want to buy their own homes and have a stake in society. In my view this legislation will help these people. That is why I am asking that this Bill be passed, that the agency be set up and, in the fullness of time, this will be seen as one of the best Bills to be passed by this Government.

Will the Government accept amendments?

We will accept amendments which are submitted up to as late a time as we can.

Will they be accepted?

I said we would welcome amendments which will improve the Bill, because this is very important legislation and I would like the Opposition to participate as far as possible. Any amendments they put down which will improve the legislation will be accepted.

What is the latest time for taking amendments? I want to clarify this point because I do not want a dispute later.

Up to 5.30 p.m. this evening.

This gives very little time and this is the first indication we had that there would be a time limit. Would the Government allow us up to 11 a.m. tomorrow?

As Deputies are aware amendments have to be processed and examined. There is no point in allowing amendments to be submitted up to 11 a.m. tomorrow and then saying we cannot discuss them. We want to treat all amendments seriously and the only way we can do that is by looking at them early. I believe that is a reasonable request. If an amendment is handed in at 11 a.m. tomorrow we would not have time to assess its merits.

I do not wish to be awkward but——

I accept the point the Deputy is making.

Let us say 10.30 p.m. tonight.

There is not much difference between 10.30 p.m. tonight and 10.30 a.m. tomorrow because the House would not be sitting and it would mean the staff——

We will compromise. What about 9 p.m. tonight?

How about 7 p.m. tonight?

Let it be 9 p.m.

Unfortunately the Minister of State is leaving the House but there were a few points I wanted him to clarify.

I will be back in a moment.

There are a few points in this marvellous legislation I would like the Minister of State to answer. I would like to hear his definition of "social", "anti-social" or "anti-family".

I will take careful note.

It is because we are serious about this Bill that we said it should not be guillotined. Housing is an instrument of social policy and a Bill dealing with it should not be rushed through this House. Why is this Bill being pushed through? Is it because it was part of the Fine Gael election programme? Is it because a commitment was given that it would be put through before Christmas? If so, that is a very poor reason for rushing it through this House. Nobody in this House is against anything which would help lift the building and construction industry off the floor and which would try to meet the expanding needs of our young population who are trying to reach their first objective in life, that is, providing themselves with houses. Everybody knows a house is a man's castle and it should be the aim of every Government to help him reach that objective.

I cannot see the reason for rushing this Bill through the House. Is it being guillotined because the Coalition have failed to deliver on so many of their election promises which were sold to the electorate earlier this year? Despite what the Minister of State tried to convey to this House, this is a fundamental change in housing finance so far as the State is concerned. Let there be no doubt about that. To say that this Bill is merely setting up an agency to borrow money to help people build houses is an over-simplistic approach, the same type of marketing strategy that was invoked by this Government when they tried to sell many of their other election promises. We all know how the public were fooled, how the stay-at-home housewives were fooled, by this expert marketing strategy. Today they know the real score but they did not last June.

The same policy is being tried here today—the simple side is being sold. The Government are not pointing out the full financial implications as far as a young married couple who want to buy a house under the scheme are concerned. That responsibility rests primarily on the Minister and on the Opposition. We will endeavour throughout the debate to give the reasons why we were reluctant to permit this legislation to be guillotined through the House and there are good and valid reasons why. It is our duty to be vigilant and constructive in Opposition. We must ensure that the public is fully aware of what is involved. We should not have a simplistic approach of forming a company to borrow money and then give out mortgages. We must investigate it fully and see how such a proposal affects the situation in relation to housing finance so far as the Government are concerned and what the end effect will be on the borrower. We must be able to spell out clearly to the borrower whether he or she will be better or worse off. There is a fundamental switching in policy in this regard and I will go into it in more detail after Question Time. That switch relates to housing and Government finance and how the borrower will fare out at the end of the day.

Debate adjourned.