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Dáil Éireann debate -
Tuesday, 12 Nov 1985

Vol. 361 No. 8

Housing Finance Agency (Amendment) Bill, 1985: Second Stage (Resumed)

Question again proposed: "That the Bill be now read a Second Time."

Deputy Michael Keating is in possession.

I wish very briefly to urge the House to agree with this measure and in so doing to note that the Housing Finance Agency has been an outstandingly successful option for many people who could not otherwise have obtained ownership — or, indeed, tenancy — of their own homes. I hope the Minister might consider the revamping of the agency and the extension of its remit so that it might be able to engage more directly in the business of providing housing for people in need of it.

The average cost of a local authority house in 1983 was of the order of £34,000, a cost which needs a sum of £4,500 in perpetuity to service it. My argument is that it is not unreasonable for the State to consider whether the present system of funding and construction of dwellings, particularly in the local authority housing sector, is appropriately delivered. There certainly was a time when the local authorities had to deal with housing construction and housing needs as they now do, but the agency has shown us that there is a demand out there for people to own their own homes. That agency has, to some extent, pointed the way. I suggest that the Minister might consider, even on a pilot scheme basis, whether it would be possible to take a portion of the present capital allocation for housing which is expended by the local authorities on behalf of his Department and give it direct to people on housing lists in the context of 100 per cent housing loans which would be repaid over as many years as necessary by people who would then own their own homes.

The irony of the present situation, which might appear a more stringent economic approach on first glance, is that the total income from rented dwellings at present covers approximately half the cost of maintenance and makes no contribution at all to the capital cost. The result is that the Housing Finance Agency option, extended to its logical conclusion, would be socially preferable. It would mean that we would not continue to perpetuate an arrangement whereby there were two classes of people — those who owned their own homes in the private estate area and those who rented them in the local authority housing estate area. It would be economically far more beneficial in the sense that it is not unreasonable to suggest that the present arrangement, whereby there is a perpetual £4,500 annual grant escalating in accordance with inflation for every local authority dwelling, regardless of the incomes of the people in the dwelling, is one that simply cannot be sustained in the medium or long term.

From the point of view of proper social development, of the rights of the individuals who are in such dwellings, of the harmonious and integrated social mix, of sensible economics, it is far more reasonable to suggest that the vast sums of capital grants in due course be converted, in large measure if not in total, to direct loans to people who would repay them in an orderly fashion. Probably this would mean that the mechanism of the local authority as an agent in developing, designing and constructing houses would no longer be appropriate but that the local authority would, in fact, become a building society. All I am asking at this stage is that the Housing Finance Agency be guided in considering whether such an approach would be wise. I am convinced from long experience of local authority housing that such an approach is not only desirable but essential if we are to get away from the ghetto mentality which at present surrounds our approach to local authority housing — an approach which may have been reasonable in trying to deal with the crisis in housing ten or 20 years ago but is no longer justifiable in that context. It is producing very significant social disadvantage in terms of bringing together in particular areas residents who have in many cases particular types of difficulties. Anybody who looks at the present inner city of Dublin, where, I think I am right in saying, no new private housing has been built between the canals during the last ten years, will see what I am talking about.

My wish is that the agency, in continuing its successful work, will be asked to consider extending its remit a little further, or that some other mechanism be found which would give people not just a roof over their heads but their own roofs over their heads, and that the taxpayer be no longer asked to subsidise that unnecessarily. Obviously, the taxpayer will have to continue subsidising where there is true need and where people cannot be asked to cope with that themselves. I proffer these remarks with respect to the Minister, whom I know to be very concerned about local authority finance in a number of respects and local authority housing finance in particular. I would be happy to develop these thoughts at greater length on another occasion when perhaps a more appropriate Bill than this might proffer itself for consideration. In the interim, if one looks at the vast sums being spent on the local authority housing sector one is reasonably entitled now to ask, could we be spending that amount of money in a better way? I suggest that we could, perhaps along the lines just mentioned by me.

I welcome this Bill which, as the Minister stated, increases to £500 million the amount the Housing Finance Agency may borrow in making loans. I wish to raise the matter already raised of the impression of the majority of people about this type of loan, that they will have very small repayments to make in the early stages. People might be under the illusion that this is a type of loan for which, particularly, young people should go because we are talking about a minimum repayment in year one of £125 a month, or £30 a week. That sounds very attractive when one can borrow £22,500 under this scheme or up to £27,000 if one is a local authority tenant or in the special category.

The figures made available from the agency and through local authorities would suggest that with £125 per month in year one and £1,257 per month in year 30, one would be paying ten times the amount after 30 years, if paying 20 per cent of income. That frightens off people when they read through the actual scheme.

I know it is mentioned in the actual hand-out from local authorities that people should consider choosing to make a higher repayment so that the level of the outstanding debt is not increased. I know that most local authorities advise people that they should pay more than the 20 per cent of their income but it is now nearly imperative that all local authorities do that because you can borrow £27,000 in the special category areas with an income limit of £10,000 whereas the SDA loan can only give you a maximum loan of £16,000 and the repayments will be £43 or £44 a week over a fixed 30 year period. There seems to be something wrong when you can borrow so much money under this scheme and find yourself for the first 13 or 14 years paying a subsidised amount.

I would like to pay tribute to the people who operate those schemes on behalf of the agency, namely the local authorities. The housing section of many local authorities are up to their eyes operating the SDA loans and the disabled person's housing grants as well as other local authority programmes and for the last few years they have been operating this scheme. They have to get involved in a lot of calculations to try to help out people. People may decide to pay more than what is required under the scheme. Local authorities also have to get involved in deducting the amount of new house grants paid and the actual mortgage subsidy which is taken off the loan.

With regard to the question of assessing the amount of loan to be offered to an applicant in the special category area, I would like the Minister to look at a situation where a person who is building his own house goes to the local authority and finds that very little value is placed on the actual site where he is building. In order to get over the problem where only 90 per cent of the value of the house can be borrowed, if the Minister cannot bring in a scheme where a person gets a 100 per cent loan on the value of the house he should ensure that a reasonable figure is placed on the site where the house is being built. I find that a very low figure is being put on the value of the site and this will not help out applicants who want to get more than 90 per cent of the value of the house when applying for a loan. There are many local authority sites available in every county. The local authorities should be encouraged to promote the sale of these sites and give people an opportunity to borrow more than the value of the sites. If those people went to other agencies they would probably get more money apart from the county council SDA scheme.

I have always been impressed by the fact that the Housing Finance Agency have a mortgage protection policy. The actual terms of the policy arranges for this protection for every loan advanced to cover the borrower in the event of death or permanent disability. Only 0.25 per cent is added to the interest rate to cover the cost. It is very important to have this in the Housing Finance Agency scheme. It is not in the ordinary county council SDA loan scheme and people have to take out their own insurance policy for mortgage protection. It is also very welcome that in this scheme when a person is unemployed the payments can be deferred.

There is no mention in the Bill in regard to where the borrower decides to resell his house and he will not benefit from appreciation in the value of the house in the same way as a person who has an ordinary mortgage will. I would like the local authorities to talk to people who are making very low repayments and who obviously will have to make a substantial increase in their payments near the end of their loans. The people in local authority houses can borrow up to £27,000. Such people can also get a £5,000 grant to vacate their local authority houses if they find new houses and are borrowing money. Those people will obviously get new house grants. The people in the special category can only borrow £22,500. The Minister should ask the agency to equalise this situation and allow the £27,000 to any applicant who, because of his income or because the house he is buying is 90 per cent of the value, can also avail of the £27,000, because it is hardly fair to confine this loan to special category applicants or local authority tenants.

This loan will be attractive while inflation is low but if inflation increases people will find great difficulty in making repayments. In cases where local authorities have sites I would like to see them sold for building. I would also like to see the loans, which can be paid in two instalments, being paid in three or four instalments. We are talking about a considerable amount of money, whether it is £22,500 or £27,000, and it should be possible to make the payments in three or four instalments. Our entire housing policy must be looked at with a view to improvement.

However, we will not be allowed to speak about that on this limited Bill, but I should like to say briefly that many more people would be interested in the scheme if the improvements Deputies have been suggesting could be brought about. We might be able to get the agency to make some improvements. They have pointed out how difficult it can be for borrowers who decide to sell their old houses in order to buy new ones. They come back to the agency for another loan but there is a condition on Form No. 2 that they must approach the inspector of taxes and say they did not claim tax relief on repayments. Obviously, that would debar a person from going to the agency for a second loan, which is exclusively for first time buyers. I should like to see the scheme broadened to cover people who want to sell their old houses and buy or construct new ones.

Under the SDA schemes we have grants and subsidies for new houses and for reconstruction work on existing houses, but under this scheme the floor area must not be more than 125 square metres. Under county council reconstruction schemes the figure of £6,500 is confined to new houses and I am glad that under this Bill we are increasing the grant to £5,000. I hope that later when we have an opportunity to talk about local authority housing policy we will have a general debate on housing policy and include in it conditions under this Bill. I suggest that the agency might draw to the attention of young borrowers the pitfalls attached to the scheme if they do not repay more in the early years of the loan.

I will be brief. I welcome the Bill because it increases the amount of money the HFA may borrow for loans for the construction of houses. The present borrowing level is about £200 million. I should like to refer to a paper prepared for the Construction Industry Federation by Mr. D. K. McCarthy. It states:

The degree of flexibility that local authorities could enjoy with a system of capital grants or income supplements could be seen by reference to total expenditure in 1984 of £211 million: 6,000 house completions and work in progress on 8,000 houses by the end of the year. In terms of completions the average approximate was £35,000 in 1984.

It was the same in 1983. There is a small reference in that document to which others have been referring, that is, that capital expenditure in 1984 by local authorities would provide capital grants of £7,000 per household on the waiting list which would cater for 30,000 families. The net effects of comments made by Deputies from both sides in relation to the possibility of increasing grants and thereby bringing more people in who could afford to buy their own houses is that there is general agreement with this scheme, and even though Fianna Fáil objected strenously in the past, and from time to time sniped at it, there is no doubt that if and when they get back to office this scheme will be kept going.

After the short experience we have had with this scheme, have we learned any lessons from it? In that regard I will confine my comments to the purpose of the Bill. The Bill provides for an increase in the sum to £500 million and it will provide better value for money than the Government have been able to get from the HFA. It is difficult to know where these schemes come from but eventually they are introduced by a Minister and many people make suggestions from time to time but they seem to fall on deaf ears. The ones I have made have, but I have seen in the schemes one or two ingredients of what I suggested. I hope that on Committee Stage the Minister will refer to some of these points and that he and other Ministers will open a channel whereby backbenchers and others could contribute to the policy of the HFA, particularly Members of the House who have a considerable amount of experience of local authority housing through people with housing needs coming to them. One could say with confidence that such Deputies know what they are talking about.

We could address ourselves to immediate difficulties that can be met in the working of the scheme. One of them is bridging finance. People are encouraged to take out bridging loans for the £5,000 grant in order to get into their houses. It is natural that the builders encourage——

We are dealing with the Housing Finance Agency (Amendment) Bill.

With the greatest respect, I was waiting to see how long I would get away without being interrupted. The last speaker spoke for 25 minutes, the speaker before that spoke for 15 minutes and not a word was said to either.

It is only a matter of information. We are supposed to be talking about the Housing Finance Agency but you are talking about grants.

I have had the papers in front of me in my possession since 1983 but I have not had an opportunity to say anything about them in the House. I brought them to the attention of the Minister and the Minister for Finance but I got no response from them. Now, right away, I am told it is not relevant. The last speaker, or the speaker before him, or the speaker before him again was not told this.

The Bill is about the Housing Finance Agency. It is a limited Bill whose purpose is to increase the finance available for the agency to £500 million. Some small sections are being amended. In the past few minutes you have gone into the housing grants area. It may be relevant to housing but not to this Bill.

A Leas-Cheann Comhairle, with respect it is very difficult to make a contribution if one is frequently interrupted because it knocks out one's train of thought.

If the Deputy is out of order, he will be interrupted.

I hope to remain on my feet and to be in order as long as I can. It is terrible that a person cannot make his point. One is not listened to outside the House and one cannot even make one's point within the House.

The Deputy will appreciate that there are certain limits to this debate. The Deputy has read the Bill. It is a very limited amending one and does not permit a large scale development of a discussion on housing in general. I said that to every Deputy last week. I am only asking the Deputy to co-operate with the Chair in that matter. The Deputy's attitude of remaining on his feet is all right provided he is in order. I am not stopping him.

The way I read the Bill is that its main purpose is to increase to £500 million the amount the Housing Finance Agency may borrow for the payment of loans for the construction or building of houses. I submit that, therefore, I can talk about how the £300 million extra can be spent, how the £200 million has been spent to date and whether or not we have got value for that money, and to include any suggestions as to how value could be got for taxpayers' contributions and how we could improve the housing situation generally. That is what I am endeavouring to do. If I go off the track ——

The Deputy's parameters are all right provided he remains within them.

I am endeavouring to remain within them. I did mention bridging finance which constitutes a great problem for many people. There are hundreds of people being walked into bridging situations they cannot afford. That relates to the £5,000 grant and the main loan for houses. Prior to the inception of this Housing Finance Agency these would be people who would have been unable to afford to buy their own houses. They were encouraged to do so by the establishment of the agency. Having carefully calculated their income, perhaps that of the husband and wife, they go to buy but then find themselves in a bridging situation in which they may remain for several months.

There are various reasons for that. One is that very often the legal department are not in liaison with the loans department. The loans department may be saying to the couple concerned that they are all right, not realising that the legal department may be three months behind, causing people incredible hardship. Certainly in the case of many people I have met, had they the chance again, they would not allow themselves to become involved in such borrowing. They go around advising others likewise. We should advise people. I know builders cannot be blamed because they are endeavouring to get the money to survive. People should be advised not to become involved in bridging finance which will involve them in much trouble.

Some people pay over £100 per week by way of bridging finance whereas, under the terms of the lending of the Housing Finance Agency they will end up paying 20 per cent of their income. They cannot afford such bridging finance and that may continue for months on end. We have an obligation to inform people of prospective delays, of the current situation, and endeavour to sort it out. I should like to warn people not to enter into bridging finance commitments. They are told and believe in their naivete the position will be sorted out in two to three weeks when often it takes anything from three to five months. They borrow money from sharp money lenders, credit unions and banks in an endeavour to survive. As I understood the concept of the Housing Finance Agency when established, that was not the intention.

I have had some examples of solicitors not appearing to understand that the obligation is on them to contact the relevant local authority and formally request the cheque. Very often when people come to me they are being told by their solicitor that their cheque is not ready. I have made inquiries and I understand that it is up to their solicitors to formally request the cheque, that local authorities do not inform solicitors. Solicitors should advise their clients. Very often they act for purchaser and builder, an anomaly I should like to see removed. I do not think a solicitor can act for both, treating each fairly, especially if he is acting for a builder building a lot of houses when his job will be to get people into those houses for the builder. He is not then acting in the interests of the purchaser.

Many of these will be people who cannot afford to be out of pocket even to the extent of £100 in loans. These may be people who have extreme difficulty in making ends meet who, very often, are hungry and do not understand the benefits of a drop of 1 per cent or an increase in a grant of £300 million. That means nothing to them if they cannot afford to put food on the table or pay the rent at the end of the week. They may have the dream of moving into their own home but we have an obligation to render the realisation of that dream as easy as possible for them which may entail their being careful about their financial arrangements until they eventually gain possession of a house. Certainly it is not their intention to go into debt.

I might give one short example of the case of a lady who came to me. She was in occupation of her new house. The corporation decided, unknown to her, that she owed them approximately £400 or £500 arrears of rent and they would not release the relevant grant. That woman had to obtain bridging finance until she obtained the £5,000 grant. It transpired that she had paid twice that amount but the corporation still would not release the grant. That is just not right.

Because of the success of the Housing Finance Agency we are experiencing the great move out of local authority areas, very often to private housing estates. We should consider the future implications of that trend, the desirability of getting people out of those estates. That raises another question which the Minister and the Housing Finance Agency should examine. What kind of housing do we want for our people? What should be the end result of the Housing Finance Agency operating in an ideal situation? Should it mean the ending altogether of local authority houses? Should we try to encourage people to buy their own homes anywhere they like because that carries great advantages?

Deputy Kitt spoke about increasing the loan to £27,000 and Deputy Keating spoke about 100 per cent loans, very worthy suggestions. The Minister should consider the cessation as far as possible of local authority building, allowing people to purchase private dwelling anywhere they like. I represent a constituency through which both canals flow and I have given that matter very serious thought. I have looked at the deterioration of the city of Dublin and housing around Dublin, due mainly to lack of proper planning. In that respect I might highlight the great advantages to be had from this agency.

I am glad that under the provisions of this Bill the House is requested to increase the amount the Housing Finance Agency may borrow in order to provide more houses for our people. The maximum Housing Finance Agency loan is £22,500 and that effectively determines: (a) the size of the house and its price, (b) the location of the house, (c) the people who are in a position to buy the house, (d) those who must look to the local authority for housing and (e) the amount of personal savings necessary or the amount of additional borrowing necessary. A person on a salary of £7,500 per annum can get a loan of £22,500. With this and the minimum of savings or bank borrowings, a person could buy a house costing £26,000 which appears to be the base in current market conditions. The position is much the same as it was a year ago which means that house prices have remained stable.

A person with a salary of £5,700 per annum can only obtain a loan of £17,100 and, given that people on such salaries have very little, if any, savings, their maximum expectation would be to buy a house costing £20,000 and there are very few of those. If, however, a person wished to purchase the typical house on today's market, he would have the impossible task of finding a further £6,500 allowing for the grant from the Department of the Environment. Therefore, although the person on a salary of £7,500 receives a loan of £17,100, when tax has been deducted there is not much difference between him and the person on the lower salary.

The person on a lower income can never realistically hope to buy a new house in present circumstances, whereas if he was entitled to the maximum loan, a point which the last two speakers made, he could have a sporting chance of home ownership. If the maximum loan were increased to £25,000 — Deputy Kitt mentioned the sum of £27,000 — and made available to people on salaries of £5,500 and upwards, it would transform the housing market. If people had a greater chance to own their own houses, through the medium of higher National Housing Finance Agency loans, local authority lists should decline. It now costs about £40,000 to build a local authority house. It could be argued that it would pay the Department of the Environment to further grant-aid applicants for NHF loans since they would no longer be a burden on the State.

The implications for employment in a resuscitated building industry following restructuring of the NHF modus operandi are very obvious. The advantages are that existing tenants would give up their houses and purchase in the private sector, thereby freeing local authority houses for needy tenants. That is happening at present because of the grant of £5,000 for those who can afford to get out. However, getting out is not the sole objective and I will elaborate on that later on. It would mean the complete transformation of Dublin city of which I can speak and would also do the same for the rest of the country. Of course we can only estimate how many people would avail of this opportunity but we could gauge the numbers in the new bracket by their earnings.

It would also effectively do away with local authority and corporation houses as we know them and speaker after speaker mentioned this. It would free large numbers of people at present in administration, architecture, engineering and quantity surveying in local authorities and, without cost to the Government, it would boost private sector building and financing. I should also mention that this would not cost the local authorities anything either. What is local authority rent per unit as against the repayment per unit? These figures are readily available. Given the extraordinary things which £300 million can do if used properly, this is the time to think about suggestions which I made. It will enable large numbers to buy the house of their choice, in the area of their choice, which is not the case at present because they have no savings and, therefore, no deposit.

As many speakers mentioned, it would relieve maintenance and management of these houses which would result in huge savings to the Exchequer, tens of millions of pounds. It would increase building to market demand and would not be restricted by the amount of money available to local authorities and the building programme. It would enable more houses to be built for the same money and would at least double housing in corporation and county council areas all over the country. I do not think this has been considered up to this but this Bill and the amendment make this an opportune time to review the situation. It would also eliminate the suspicions of the cartel which, it is alleged, is operating in local authority housing. It would also question the present costs to corporations and local authorities of building houses about which private developers dispute and have disputed in the past. There are many social advantages which also must be taken into consideration in allocating this huge sum of money from the Exchequer which the Minister is asking the House to approve. For example, there would be no ghettoes and it would remove the stigma from those people who think there is one of living in a local authority area. It abolishes the degrading points system which, although it may be necessary——

The Deputy is straying from the Bill.

It opens the possibility of providing houses for the needy and paying rent only on corporation and local authority housing on the savings made. It means that people would no longer be a burden on the State. The savings can be quantified in millions of pounds.

Every Member who holds a clinic knows the trauma, deprivation and hardship caused to people on housing lists. This would also introduce self-help in place of handouts and would give great hope to young people who want to get married and to set up home. It would pay the Government to invest this money with insurance companies. It would also control the increase in house prices by builders by means of the certificate of reasonable value. Given the row that was kicked up here regarding the sum of £300 million given to the National Development Corporation, it would release some of the £450 million which is in private hands in the construction industry. It is another example of how we could get masses of people back to work and increase the confidence of the entire community. It would satisfy to a great extent the demands of house builders and allow the Government more money for the productive and manufacturing sector. I should like to hear the Minister's answers to these questions.

The National Housing Finance Agency loan should be increased to £25,000 and it should be available to all with incomes between £5,500 and £9,000 per annum. In order to ensure that the purchaser would own his house sooner and to be more in line with building society practice, there is a strong argument for sliding the 20 per cent salary requirement to a maximum of 23 per cent over seven years. That is an answer to the point about reducing the ceiling to wage earners of £5,500, many of whom it is stated would not own their homes in their lifetime. Why should people on an income of £5,500 be excluded? By including them we would answer many of the problems in the private and the public sectors.

What I have suggested would be in line with the Government's policy regarding private sector investment. What we need is a team effort. Any person with a job will earn a minimum of £5,500: the average industrial wage is much higher. This means everyone could have the opportunity of buying a house. It also means that we will not be selecting people with the worst health, financial and educational problems, putting them on a list and putting all of them at the same time into estates, thus creating enormous problems. What is happening at the moment is that a healthy person is asked almost to degrade himself in order to secure enough points to get into the system. He is nearly asked to become ill to increase his points. It is a bad system and we should do away with it at the earliest possible opportunity.

The Housing Finance Agency has proved a success. Before we give the extra £300 million we should consider the best way to go forward. I was born and bred in Dublin and I am sick of looking at its dilapidated state. As I said last week, it is falling into the river. Huge problems are arising every year and to a large extent they are occurring because we are not anticipating the future needs. We could eliminate many of the problems by proper planning and by carefully monitoring the housing market. Dublin County Council have done very good work throughout the county. They have had a good mix of local authority and private housing in manageable estates that are landscaped. These estates have been laid out beautifully and people love to live in them. Dublin Corporation should get their act together. They will not listen to anyone. They will not follow the example of Dublin County Council. They will not try to plan their estates properly but they go on willy-nilly and destroy everything.

Will the Deputy please plan his speech on the Bill.

The Minister is in a position to lay down conditions under which the £300 million will be spent. He should use his power over the local authorities to ensure they plan properly for the future of the citizens. There will have to be careful monitoring over the spending of taxpayers' money. The Minister has enormous powers if he wishes to use them. He could clean up Dublin Bay tomorrow.

Not under this Bill.

He could stop dumping in the Liffey Valley tomorrow. He could make the housing authorities respond to his directions because he controls the purse strings. I cannot understand why our friends across the floor of the House do not realise the benefits to be got here. When they were in Government they nearly choked the Housing Finance Agency because they would not release funds. All of us should try to solve the housing problems. Has anyone ever tried to do that? I have been a member of the Committee on Building Land. That committee have put forward constructive suggestions which I hope will be discussed in the House at a future date.

I do not come here just to let off steam or to listen to myself talking. I hope the Minister and his officials will listen to what we have to say. Practically every Member of this House knows what is happening in the area of housing. There is no reason whatever why Dublin should be in the state it is at present. We have the power; we know the problem: why can we not come up with a solution to it. If it was in the private sector it would have been solved long ago. I have not been able to get this across and I have to mention it in the House in the hope that the matter will even be discussed. If the Minister wants an extra £300 million I am entitled to put forward my tuppence worth——

Yes. We are talking about whether the Minister should get that £300 million. The Minister can ignore me — this is usually what happens — but on behalf of my constituents and of the people throughout the country I must put forward a case. I will continue to do that as long as I am here, even if it is uncomfortable to listen to what I have to say. That is my job and that is what I will do, regardless of the cost to me.

I have heard some very weak answers to some of the questions raised. I know I am limited in what I can say in relation to the overall problem. Nevertheless this is one of the two page documents that has come to the House involving, in one case, the nodding through, a term used by correspondents, of £100 million and which resulted in Members being criticised for not examining carefully what we were nodding through. For example, we nodded through £80 million for Aer Lingus and we are talking here about £300 million. Is it the attitude that because the Bill is only a two page document containing four sections that we should not spend too much time on it, that because there may not be many people in the House, it can be put through without detailed examination? The Minister may not have to come back to the House for some time in respect of any extension of the power in this legislation because he can increase the lending to £500 million with the permission of the Minister for Finance but I wish to hear how the money is being spent and why it is being spent. It may be some time before we have an opportunity of reviewing how the money is being expended.

I was told by the Minister for Finance on another occasion here that rents of local authority houses make no contribution towards loan charges and meet only half the management and maintenance cost of the dwellings. That Minister reminds me also that our priority must be to review and monitor local authority housing costs as a whole.

I would remind the Deputy that he is not talking to the Bill.

I fail to understand why I am not relevant.

The Deputy is not relevant. He is talking about local authority rents and that matter does not arise on the Bill.

I am not prepared merely to say to the Minister that he may go ahead with this Bill without ever going into it in some detail.

I have been very generous with the Deputy but he must now return to the Bill.

The point I was making——

The Deputy has been making a point for the past 20 minutes.

One cannot be expected to make a point without first building it up in some way.

The Deputy has been constructing extensively.

I hope I am being constructive but it is difficult to make a contribution when one is cut short in the middle of what one is saying.

If a Deputy is relevant to the matter before the House, he is never cut short.

We are talking here about the Minister for the Environment. The Bill provides that the agency may, with the consent of the Minister and the Minister for Finance——

That relates to the borrowing power of the Minister, not to local authority rents.

Section 2 provides that the agency may with the consent of the Minister and the Minister for Finance do certain things and I have been saying merely what the view of the Minister for Finance is on a certain topic. I was following that up by saying that his view is that our priority must be to review and monitor local authority housing costs as a whole and achieve better value for public money rather than embark on expensive schemes of grants. Surely that relates directly to the Bill.

I do not think so. Will the Deputy please continue on the Bill?

I must put on record that I do not agree with nodding through an additional £300 million without being able to examine what the money is for and how it will be spent and whether the earlier amount of £200 million has been spent wisely and well. If it should be found that the earlier money could have been spent better, surely savings could be achieved in respect of the money being sought now. It is difficult enough to make the point and I hope it has not been lost by the interruptions.

The Chair does not interrupt. He is guiding the Deputy for his own good.

I appreciate that. I hope my point has not been lost by the attempts of the Chair to keep me on the straight and narrow. I appreciate that any new scheme of grants, whether in the form of capital grants or subsidies, towards house purchase will tend to increase house prices and thereby erode to some extent the benefit that would otherwise accrue to the purchaser. However, I think I have answered that question well by saying that this is something that can be controlled by the CRV system. In the past couple of years the price of housing has not increased to any appreciable extent and has reduced in some instances.

We always seem to come back to this question of operating difficulties but I should like to take the opportunity to deal with all these schemes in the light of any difficulty that may arise. All I am asking, and all I ever ask, is that they be considered carefully, that they be deliberated on and that a decision be made on them. What concerns me is that often these schemes are not even considered. I have made submissions on other occasions both to the Minister for Finance and the Minister for the Environment in relation to this kind of scheme. The then Minister for the Environment, who is now the Minister for Energy, told me that he accepted fully the principle underlying my suggestion. That was essentially that those in receipt of modest incomes should be given a better chance to buy houses for themselves and in that way reduce the local authority housing lists.

The Minister told me also on that occasion that after we had more experience of the operations of the Housing Finance Agency it might be possible to increase their limit but that at the time he thought it was a little risky to contemplate doing that. I understood that, but that was more than two years ago. We have now had two and a half years experience of this scheme and it is time to review it with a little courage. The Housing Finance Agency concept was a step in the right direction but I have heard people say that many problems have stemmed from it in the sense that certain local authority areas have been denuded as a result of applications under the HFA scheme. It would be a much easier procedure and much more worthwhile if people could buy houses where they wished. We know that local authorities cannot build houses as cheaply as they can be built by the private sector. It would be in the interest of the Exchequer if people, on being allotted local authority houses, were told that they must maintain them themselves. There is no reason for not examining the prospect of such a scheme now, before most of Leinster is blotted by the indiscriminate and undisciplined building, especially in the Dublin Corporation area. That sort of situation could be corrected to the benefit of the nation as a whole.

The Minister, by way of the agency and through his Department, has enormous influence in this respect. The Minister of State has long experience of local authority housing in Dublin city. There is a great deal of expertise available, much of which is not utilised. It was left to the architectural department of UCD to undertake a study on the quays in Dublin. Studies undertaken both by that body and by students from Bolton Street have shamed the Departments but yet no action has been taken. We should switch to private housing because we all need better value. This change also would solve a great social problem. By using the public and private sectors in this area we could put large numbers of people back to work.

The Housing Finance Agency scheme was brought in primarily to give people who could not acquire finance through any other source an opportunity to acquire homes for themselves. The intent behind that is laudable, but once that principle is adopted everything should be done to make the path easy for those who wish to avail of the HFA scheme.

One point which is causing very serious problems is the question of delays. The law's delays are notorious and go back hundreds of years and were written about centuries ago. But the delays which are taking place today are due, I think, to lack of staff in the legal departments of the main local authorities. My knowledge is confined to the Dublin area, but I understand similar situations pertain in other urban councils around the country. For example, from the time the title deeds are sent in to the Dublin council law offices, it takes anything from six to ten weeks before they are even looked at, let alone processed or the title examined.

For people going forward for a Housing Finance Agency loan, time is of the essence. Every week is a crucial factor. In many cases these delays are literally crippling young people who are starting out in life and buying houses. They are building up debts because they had to go to the banks for bridging finance. I do not know whether these delays arise from bureaucratic shortcomings and inadequacies of staff, whether approved by the Department or whatever. There are many legal people unemployed — solicitors, solicitors assistants and clerks — who could be taken into the law offices of the local authorities. This would enable the title deeds to be dealt with in an appropriate period — one week at the outside ought to be more than enough. At present we are told, shamefacedly, by employees of the legal departments of local authorities that the papers had arrived but were put at the bottom of the bundle and because of severe pressure of staff, it would be at least two months before they reached the top and were allocated to somebody. As Deputy Skelly pointed out, bridging finance can cost £100 a week. That is a crippling factor for people who are trying to avail of this scheme. What is the point in purporting to hold out a helping hand to these people if at the same time we are putting unnecessary difficulties in their way?

It is not as if the legal departments of the local authorities provide their services free, not at all. They charge for examining the title and these, fees have to be paid on completion of the work. If any Minister or civil servant thinks there is an economy to be made by clamping down on the necessary staff to examine title deeds, then all I can say is that this is false economy. People waiting for their loans would be delighted to pay the fees to have the papers cleared and there would not be any cost involved to either central or local government. I do not know why it is so difficult for anybody to see a simple point like that. If the necessary staff were provided we would avoid the present position which is reaching the proportions of a scandal — this is true in the Dublin area. The burden this delay places on people looking for loans has to be seen to be believed. It is tragic and pathetic. It reduces young men and women to tears when they see their chances of getting a home slipping away because of this bureaucratic nonsense.

It takes longer than necessary to process applications. I do not know why it has to take four, five, six, seven or eight weeks to process these applications. There seems to be too much bureaucracy at that end of the procedure as well. A fortnight or three weeks at the outset should be adequate to deal with these matters, assuming all the necessary documentation has been provided and that the papers are in order. I ask the Minister of State to have some inquiries carried out to see if the procedures cannot be streamlined. As I said, time is of the essence and there is no reason why, if everything was properly organised and adequate staff was available, the whole operation could not be completed within six weeks from the time a contract to buy the house is signed until the deed is completed. At present, the sky is the limit. It can take three, four or even five months to complete such a transaction — nine months is not unusual and a longer period is not unheard of. One must take into account the fact that some legal officers are not the fastest workers, and if a prospective purchaser is unfortunate enough to get a combination of these circumstances he can be in trouble. Many people have lost the opportunity of getting a house as a result of such happenings. That is a tragic situation.

The Bill deals with financing from the Housing Finance Agency. Efforts ought to be made to broaden the availability of lending for house purchasing from other institutions also. The responsibility for providing funds for house purchasing should not fall on the Housing Finance Agency alone, on the local authority alone, or even on the building societies alone. The other major financial institutions in the State — the banks, the insurance companies, the commercial banks and so on — should have a responsibility to provide at least some appreciable measure of finance per year out of their resources to enable people to get long term loans to buy houses.

Years ago the insurance companies and some of the banks used to put aside a reasonable sum of money for this form of lending, but that seems to have diminished over the years and very little is provided by the banks or the insurance companies for this purpose. That should not be allowed. Appropriate constraints, be they official or unofficial or both, ought to be put on those institutions to ensure that they fulfil their responsibilities in this regard — and they have responsibilities. Let it not be said by any bank or financial institution in trying to push away the undesirability of this form of investment, that they are not meant to do that kind of lending or that that type of lending is not suitable for their purposes. That should not be acceptable. When it suits them they can invest in the most outrageous forms of investment, from satellites and racehorses to dubious insurance companies that go broke and so on.

We are not talking about racehorses or satellites. Perhaps the Deputy would stay with the limited Bill.

I am making a fair point. The Chair's objection to what I am saying is not well taken and I do not mind explaining why. We are talking about the provision of money for the Housing Finance Agency. The amount of money that will be provided for the Housing Finance Agency to give loans for houses will be determined by what funds will be made available from other funding institutions for the same purposes. If the Bill seeks £300 million and £100 million were provided by the banks and institutions, that much less would be needed under the terms of this Bill. Therefore it is fair to advert to the fact that lending institutions make other untoward investments. This is a fair point in the context of the Bill.

The Deputy can make a passing reference.

I can make more than a passing reference as it goes to the root of the matter.

It is a very limited Bill.

The banks can make outrageous investments that end up in the lap of the taxpayer. If they can do that they can certainly earmark a relatively small amount of capital, be it £20 million or £30 million per year per major bank or financial institution, towards providing long term lending for at least some people to get their houses. They can do that at a substantially more favourable rate of interest than people have to pay under the HFA loans scheme which, when all is said and done and when the reality is added up over the years' spread, is a too heavy rate of interest. It is too high for many people to bear, spread over a period as it is. I take the point that the essence of the Housing Finance Agency scheme is that it is made easy in the first years. That is fair enough, but the fact remains that the interest is charged at the full heavy rate on the nail. Although the person has to repay only 20 per cent of his earnings each year the fact remains that the excess he is being charged is not written off by the Housing Finance Agency, but added on to the bill and that bill escalates with terrifying severity to a massive figure. The system frightens me. I said previously that when the scheme was introduced it would give rise to some appalling problems for quite a number of people in a few years' time.

Hear, hear.

It will give rise to a situation where the debt owing on the house will be considerably more than the house will be worth. One can visualise a situation where a person may be moved in his job to another part of the country or will have to move house due to family circumstances. Many people who have taken out their mortgages a few years ago under the HFA scheme will find themselves with a house they cannot sell because the amount they owe on it will be considerably in excess of the value of the house. They will find themselves, with inflation taken into account, living in a house worth £40,000 with a debt of £90,000 and yet they will be forced to leave it for good reasons. The complexity built in there staggers me. Many houses will be abandoned and vandalised. There will be a serious problem and it will take some unravelling. It would be far better if in our loans schemes the repayments and the repayment period were organised in such a way that at least some small amount of capital is paid back at the end of each year so that the person who is paying back the money will be buying back some small equity in the house so that after a number of years when he goes to sell the house he will be in a position to pay what is owing and not find himself in debt. The present system will cause great troubles and I fear we will be hearing a lot about it here in this House as the years roll on.

The whole system has thrown up quite a number of anomalies. There are cases where a tenant of a local authority house wishes to buy out the house in which he is living as a council tenant. We would all be in favour of facilitating such a tenant, but we have the strange situation that the one house the tenant cannot buy under the HFA scheme is the very house of which he is the tenant. The only scheme the council tenant can avail of to buy out that house is the local authority's sale scheme, but the rate of repayment under that scheme, if the house was built recently, would be astronomical and an uneconomic proposition for the tenant, yet he cannot avail of the £5,000 grant and the HFA scheme to buy out his own house. The tenant must move and buy a house elsewhere; he can buy any house other than the house in which he is living. That raises the question of the values of the local authority houses sold in this way. When the local authorities are selling houses it should be done at the value of the house and not on the artificial basis of what it cost the local authority to build it. All arbitrations and valuations other than that one situation are done on the value of the dwelling concerned.

The HFA scheme has a role to play but it needs some considerable care and adaptation as it is developed. Many people are confused and do not fully understand the differences between the small dwellings' scheme and the HFA scheme. They are both complex in the nature of the operation and greater efforts will have to be made to simplify both schemes so that the communication between the local authorities and prospective borrowers under these schemes can be achieved.

I welcome this Bill which increases the borrowing facilities of the HFA. I pay tribute to the Housing Finance Agency in its very substantial growth. Only last week at the Small Businesses Committee we had oral evidence from Mr. Jim O'Hehir, Chief Executive of the HFA, to whom I pay tribute for the fine job he has done and for being particularly helpful to Deputies. Mr. O'Hehir has presided over one of the most astonishing growths in any financial agency in this country.

I would like to raise a few aspects of the mortgage finance market. We must realise that the whole need and genesis of the HFA are based on a failure of banks and building societies to provide the types of mortgage finance required. Last year the purchase of 12,759 newly constructed houses was undertaken with mortgage finance. Building societies provided mortgage finance for 53.5 per cent of this total, namely 6,850 houses. The associated banks provided 349 loans or for only 3 per cent of the total. The societies provided mortgage finance for 17 times the rate of that of the banks. Last week the Oireachtas Joint Committee on Small Businesses interviewed the banks and AIB came up with the very plausible figure of £341 million that they had lent in the home loans mortgage finance sector. The Bank of Ireland had £250 million for house purchase. That does not disguise the fact that a big problem in both the investment market and the mortgage market is to get private sector finance directly into mortgage finance.

It is interesting to study that a little to see where the problems arise. I am referring particularly to the Bank of Ireland mortgage savings scheme. They introduced a scheme under which an individual saving with them would be guaranteed a mortgage. That has not been outstandingly successful and one must ask why. These very same banks through perhaps pension funds or insurance corporations that they are associated with are investing and getting a premium return on HFA stocks which are being sold to the investment market, and they cannot become directly involved in the business. The banks' money goes in through the HFA, taking out expensive index-linked stocks. That situation can be explained quite simply by the anomaly that the banks must suffer in the investment market. If as a young person I am interested in taking out a mortgage, the reason why I would not invest in the banks' savings mortgage scheme is clear. For every £1 over £50 that I invest the rate of return that I get is invariably taxed at a minimum rate of 35p in the £, whereas if I invest that money with a building society the tax is of the order of 28.5 per cent deduction. It is clear that it would not pay me to invest in a savings mortgage scheme with the bank simply because I could get a better rate of return tax effectively from the building society. If I wanted to invest that money in insurance I would get a tax free allowance on that investment as one would for VHI or other forms of insurance, whereas if I invest in the savings mortgage scheme I will get no tax relief. Therefore, we have a double tax disincentive for investing savings in a bank for a savings mortgage scheme. Therefore, the banks tell me, quite rightly, that if the tax code was changed they could increase their mortgage finance from its existing 3 per cent share to a far higher level. We could achieve an objective of getting greater mortgage finance availability, more houses built and greater availability of mortgages to young couples if we looked at the tax code. The building societies provide 53 per cent of mortgage finance. Local authorities built 3,700 houses last year through finance, the HFA accounted for 1,760, and the only people who are not pulling their weight in that scenario who can do so are the associated banks. Therefore, I ask the Minister of State when he goes to the Minister for Finance seeking this extra money which we are accommodating through this amendment to say that another way of doing the same thing is to call in the associated banks and tell them that we want them to develop a savings mortgage scheme whereby if people invest with the banks they are guaranteed a mortgage but that there is an impediment to that. If the saver invests in that he is discriminated against in the rate of return of dividend on his deposit. In other words, he could get an increased tax free allowance if he put the money into life assurance or if he put it into building societies he would get a higher rate of return.

I understand that under the present legislation the finance that can go into the HFA is restricted solely to life assurance corporations and pension funds. It could have been deemed at the time of the preparation of that legislation that those two institutions are interested predominantly in a longer term maturing investment and they want a secure hedge against inflation for maturing life policies or pensions that will mature when people retire. However, we must look at a situation that is changing now. The building societies are investing in the order of £400 million in Government gilts at present. Is it not ironic that a lending sector that is perceptively there solely for the purpose of providing mortgage finance — the Big Four building societies — would not be asked or even allowed to put, say, £10 million per annum into the HFA? The same applies to the banks. There is a case for de-restricting to change the current situation where only life assurance corporations or pension funds are allowed to invest in HFA stock so that banks and building societies will also be allowed to invest in those stocks. That would create a more competitive edge in terms of demand and probably it would mean that the HFA would not have to pay the very creamy premium rates they are paying at present.

There is a problem in the investment market vis-à-vis mortgage finance. We need two tax changes to get the associated banks more involved and to derestrict the finance that can go into HFA stocks.

Turning to the mortgage side of the HFA we see a number of interesting things. The HFA originally said that they would charge a mortgage at 14, 16 or 18 per cent of gross income. Very quickly they decided to charge 20 per cent across the board and in my view, from their own perspective, very wisely. I understand from the statistics or mortgages that the vast majority of them are getting loans which are three times their gross income and are paying 20 per cent on that. In the first year there is a gross repayment to the agency of 6.66 per cent which means that the net receipts to the agency are 5.25 per cent once the administrative and other costs are taken out.

The yield to the agency on the first year of the mortgage is less than they are currently paying on the stocks which is 4 per cent above inflation. Therefore, there is a deficit which the agency will have to finance. Consequently, if inflation rises mortgages with the agency will find themselves in a position where they are tied-in tenants and not mortgagees because the rate of repayment and the rate at which they are reducing the principal and the interest in the formative years on their mortgage will not match the rate of inflation. I am very worried that people with mortgages with the agency will find themselves in a position that their flexibility of moving house in the event of changing employment or change in circumstances will not be very good three years later. The mortgage could be £28,000 outstanding whereas the original principal was £25,000. Such people would be tied-in tenants. In this regard we get into the cyclical nature of high and low inflation. There is a dichotomy here. If we have low inflation it will be bad for getting investment into the HFA and good for the mortgagee and if we have high inflation it will be bad for the mortgagee but good for the investor who is trying to get ahead of inflation and preserve the value of his or her finance.

The agency has been in operation for three years during which there has been a drop in inflation but I would like to know what the position will be in the event of that not maintaining or in the event of a slump in the market. People who may have to sell their house may find that with high inflation their mortgage is a lot higher than the amount they borrowed originally. How can they redeem that? The agency may find that they have title documents which are over-borrowed. Potentially there is a position there where liabilities will exceed assets. The current predicament is that the net receipts in the first year of the repayments of a mortgage are not commensurate with the amount being paid on the investment market for HFA stock and that should be clarified. What happens in the event of high inflation?

I should like to compliment the agency in relation to their costs and overheads. They run a very tight ship with a staff of seven or eight people. Their administrative overheads are very low and, while they have the network of local authority loan and grant offices to take a lot of the donkey work off them, they have certainly not turned into a quango. All credit is due to them for being cost efficient. The growth in the agency is unprecedented. It has gone from £55 million in 1983 to £72 million in 1984 and to £86 million this year. In my view that type of growth will level off and I do not anticipate the growth level can be sustained. The agency deserves praise for the way they treat mortgagees. They deserve credit for the legal costs they apply to the mortgagee, the open position they take on house insurance, the expeditious way they pay the loans — a week or so after approval is received from local authorities — and their attitude to repossession in the event of default.

During the summer I was looking into another area of mortgage finance which did not adopt such a nice attitude to the areas I have outlined. We have a position with the building societies where, to put it mildly, there are questionable practices in terms of restrictive practises in that they often insist that there should be three solicitors for the conveyancing involved in one house.

I do not think that comes within the ambit of the Bill.

I was expecting the Chair to intervene.

The Deputy is a good judge.

A person who takes out a loan with the HFA will pay legal fees of the order of £110 in addition to a valuation fee. Those figures are very good. There has been a huge growth in loan applications to the agency and one of the reasons is because the building societies are ripping off their clients. It is appropriate that the growth of the HFA should be explained in terms of the restrictive practices on house insurance which results in them getting fat commissions. Building societies insist on people getting house insurance through their company. A person who works in an insurance company cannot take out house insurance with that company. The position is similar in regard to the employment of a solicitor.

When I stopped the Deputy he seemed to be rolling up his sleeves to get into a discussion on the practices of building societies, something that would not be relevant on the Bill. A swipe in passing may be acceptable.

Having swiped to that extent on house insurance and legal fees I should like to make two little side swipes and one is in relation to bridging finance. The delays in payments is ridiculous.

That is another topic that is not relevant.

It is relevant in that the agency pays within one or two weeks of approval that is important.

If the Bill was about building societies the Deputy could use the practices of the agency to beat them if he thought they would, but he cannot reverse the position.

Does the Chair not feel that it is important that some of the points I am raising are put on the record of the House?

I have no doubt in the world but that the Deputy will find an opportunity which is in order to put such matters on the record.

I will accede to the wishes of the Chair in this regard. I should like the Minister to refer in his reply to the practice that has developed about the increase of VAT on houses, house grants and so on and the method of calculating the amount of loan to be paid. It seems to me quite alarming the way the Irish Permanent Building Society are doing this. Where a person is availing of the £5,000 grant often it would be preferable if the local authority was the recipient of the £5,000. A person who is a local authority tenant for five years who seeks to buy a house for £20,000 may get approval from the HFA for 90 per cent of the cost. If he obtains the £5,000 grant his loan approval is reduced by that amount. From a bridging finance perspective, surely it would be much better not to give £5,000 to be spent perhaps on a new car but to let the local authority give approval for the full cost of the house, let the person buy the house and when the £5,000 is payable on occupancy taking place, it would be paid direct to the local authority or the Housing Finance Agency and the need for bridging finance would not arise. That needs to be done. I certainly welcome the announcement made last week of an extra £6 million to the £20 million announced earlier this year and the reduction in interest on SDA finance from 12½ per cent to 11½ per cent. Perhaps the Minister could clarify the situation. Would that decrease apply to new mortgages or existing mortgages?

I come to the important question of new houses versus secondhand houses. There has been growth predominantly in mortgage finance for secondhand houses but the figures for building societies and banks are not followed through by the Housing Finance Agency. When Mr. Jim O'Hehir was asked last week about this and the overall construction point of view in terms of stimulating extra activity, he said that they were introducing computerisation. As times goes on the agency will need to become more selective in their approach to ways of stimulating the construction industry. At the moment the agency is very much a life line to the industry in the same way that I hope the housing improvement grants will be. Unless computerisation is brought in fairly rapidly and an analysis done across the board on the type of houses, the type of applicants, whether on local authority housing lists — I understand that at present 34 per cent answer yes to that question — defaulting might become a very serious issue. It is not a matter one likes to talk about, but one which must be faced in times of recession. Other lending institutions beyond the terms of this Bill take a very savage attitude in relation to repossessions, but I shall leave it at that.

Future hassle can be avoided if the agency adopts a more selective process with regard to applicants. We could find in this huge growth of finance made available that of the 4,000 applicants who may get a loan this year or next year 15 per cent would have a very serious risk factor associated with them. There seems to be no screening process, other than the provision of the previous year's P60. I understand that at the moment defaulting stands only at something like 15 mortgages, which is very good indeed. That is all right in times of very low inflation, but when there is high inflation the situation could be completely different.

I refer to comparison between the mortgage rate costs of the Housing Finance Agency and of other lending institutions, some of which are in an advantageous position. It is very interesting to note that in 1983 the agency mortgage rate cost was 12.45 per cent whereas that of the building societies on average across the board was 13.67 per cent. In 1984 the agency variable figure was 13.95 per cent and the building societies 12.06 per cent. In 1985 the agency variable figure was 9.95 per cent and the building societies 12.07 per cent. In 1983 and 1985 agency finance was cheaper by between .8 per cent and almost 3 per cent, whereas in 1984 the building societies' finance was cheaper by almost 2 per cent. Could the Minister of State clarify the reasons for this? It seems peculiar that there should be such a juxtaposition in those short three years. What are the likely implications in the future?

One other request is in relation to assisting the construction industry through the agency. The Minister knows the figures much better than I do, but there is a vast amount of land available for housing construction which local authorities will never reach, either because of its size or because of the up-to-date developments in terms of local authority housing due to the huge moneys which the Government have put towards eradicating that social problem of local authority housing needs. This dormant land is costing local authorities or the Department money in terms of loan charges on it. At the same time many employed people are looking for mortgages and cannot get them through the banks or building societies. There is a real need for the Housing Finance Agency to promote joint venture housing. Already the local authorities administer HFA loans and already they own this land. They also know the people who would be the best recipients for a low cost housing initiative such as this.

The Oireachtas Joint Committee on Building Land made a very detailed study into the prohibitive costs in this area. I am asking that the agency, through the local authorities, together with the CIF, arrange for the promotion of joint venture housing on the basis that the agency would provide the mortgage finance for the applicant. In other words, the builder and the local authority would work out a straightforward joint venture but the agency can bring that to fruition by giving the mortgages. That would get over the problem of the dormant land, people would be housed who otherwise would not be and the agency would be getting further business.

The income limits laid down by the Housing Finance Agency are anomalous in this respect. A dual income family with both spouses earning £9,999.99p each gross on their previous year's P.60 can get a Housing Finance Agency mortgage. However, for a single earning member whose income is £10,001, that is over the limit. The gross income of the first family is £2 short of £20,000 but both incomes are under £10,000 and they are successful in getting a loan but the applicant with an income just over £10,000 is unsuccessful. The income limit for one income families is very unfair, indeed. It would be more realistic to put a ceiling on two income families. The wife might not continue to work. The limit for a one income family would be £15,000 and the limit for the other would be £20,000. This would be much fairer and ensure that the people who really needed the loans would get them.

In 1984 of new houses that required mortgage finance the banks catered for only 3 per cent. The associated banks are not in any difficulty with the liquidity requirements laid down at present by the Central Bank. Sometimes it could be the case that restrictions on personal credit or on liquidity across the board would not permit the banks to get into long-term finance. It is very important that the Department of the Environment, as opposed to the Housing Finance Agency, should come up with new initiatives in relation to such things as joint venture housing, perhaps allowing the applicant to get 50 per cent equity in the house while renting the rest. Various combinations have been successfully adopted in Northern Ireland. This would need an alteration in the tax code.

The Chair has restricted me to a great extent in relation to what I wanted to say about the building societies.

The Deputy has not done badly.

There are many aspects of building society mortgage finance that are blatantly restrictive practices, that are unfair to mortgagees and to other people competing with the building societies on the investment market. I hope that the Government will at least shore up their own position in relation to the HFA so that the building societies are not in an unfair position. There is a huge demand now for finance from the HFA but the building societies are lending to only 18 per cent of their shareholders. It was 33 per cent three years ago. They are so busy making money on gilts and other things that they are not interested in this area——

That would be more appropriate on the Estimate for the Department of the Environment.

——and the HFA have to pick up the bill. I support this Bill but I hope that the Minister will clarify some of the points that I raised.

I remember quite clearly that when the original Bill was introduced in 1981 there was very strong opposition to this form of housing finance from the opposite benches. Some people went so far as to say that a financial noose would be placed around people's necks from which they would never recover. There were reports in various papers that at different stages people would be paying as much as £80,000 per year to the HFA. It was said that the whole thing was entering into the area of fantasy. It might have appeared that way if inflation had continued at the uncontrolled rate of increase of two or three percentage points each year. Fortunately there has been a change and the fears expressed then by the Opposition and by others outside the political scene have not materialised. This Bill is evidence of the tremendous demand for finance through the medium of the Housing Finance Agency. One must congratulate the Coalition Government of 1981 for contriving this idea and ensuring that people could borrow money at a rate which they could afford. A large number of people have benefited and have been enabled to purchase their own houses, something they might otherwise never have been able to do. No Governments have better records than Coalition Governments in relation to the provision of financial assistance for housing, through grant-aid and otherwise. The evidence is there. This Government have their record and they are only three years in office. The increase from £200 million to £500 million provided for in this Bill is an enormous advance, apart from other assistance which has been provided.

The Housing Finance Agency may have a small shock coming to them. Deputy Yates ranged over the whole field and drew attention to a number of inadequacies. He also made comparisons between the HFA and other lending agencies. Let us consider the case of a person earning about £4,000 who wants to leave a local authority house and borrows £7,000 or £8,000, in addition to the £5,000 grant. Another person may borrow £27,000 to buy a bigger house in a more exclusive area. The rate of 20 per cent applies to the wages of the low level borrower in the same way as it applies to the borrower of £27,000 at the top end of the scale. The second borrower might also qualify for the £5,000. The rate of interest on SDA loans has now been reduced from 12.5 per cent to 11.5 per cent, not before its time. The level of housing finance cost is less than 10 per cent. On that basis and on the basis of the SDA loans, repayments are running at between £2.50 and £2.85 per week per £1,000 borrowed. On a small income there is no way to bridge the gap. No account is taken of a person who works additional hours to generate additional income for other family needs. He has to meet the additional costs out of that resource.

There is another point which bears serious consideration by the Department. One of my colleagues referred last week to the craft, guide and cunning of the Spanish and Portuguese in relation to fishing. The Irish are no less cunning when it comes to getting around matters of law and securing finance.

It has come to my notice that though properly audited and authenticated P60s are demanded in order to secure finance, some people who apply for loans are not earning at all. I have known of people who attempted to do that. They got caught before they achieved their purpose, but it behoves the agency to remember that they are dealing with taxpayers' money and that therefore they should make sure of the authenticity of the P60s. In the last 12 months local authorities found they were not as quick as they should have been in this matter, so the Department and the local authorities should be on the watch constantly to prevent it.

One thing is not clear to me. When a person pays his loan back with interest over 24 years, does the house become his sole property? A person earning as little as £9,000 can borrow £27,000 under the old scheme. That figure may not increase greatly but if the person succeeds in paying his mortgage for 24 years will he be the absolute owner of the house?

There have been some defaulters under the SDA. People have found it exceedingly difficult to continue payments when they lost jobs. Local authorities are empowered to examine that, but sometimes people are in arrears and under this scheme they may not realise that adjustments in the amounts of repayments can be made. Many people whose incomes increase still find themselves unable to make the increased payments and they have found this a serious handicap. Sometimes they may be earning excessive amounts in overtime but that should not be regarded by the agency as part of normal income because the level of overtime is not a permanent feature of incomes and people may fall behind in such cases. There should be adjustments for this.

The £5,000 grant is made available to people who intend to leave local authority houses and have new houses constructed. This has been of considerable benefit to people wishing to purchase their own houses. That is an important scheme brought in by this Government. However, there may be need for bridging finance. Between the time the loan is applied for and the handing over of the new house there can be a gap before the £5,000 grant becomes payable. This may cause serious problems for people who do not have reserve cash. There should be some mechanism, some liaison between the Department of the Environment and the agency, which would simplify the whole thing without people having to take out bridging loans.

This is a limited Bill and I will not attempt to go into general housing policy. I welcome the Bill and the thought that has gone into the setting up of the Housing Finance Agency. I congratulate the Minister, the Minister of State and the officials for the competency and expertise put into the work of making these loans available.

I agree that the HFA are a good organisation because the administrative aspect is the type of bureaucracy I like to see. The agency, administering large sums of money in the national interest, have been keeping administrative costs low. Here we have not one of those crazy quangos, of which we have enough already. We are talking about making loans available for the construction of houses.

It was not my intention to intervene. Since my election I have tried as best I could to keep to realities and truth, but Deputies on the Government benches worry me. This Bill is good news among the overall bad news we have been receiving from the Government since they took office in December 1982, and I assume they will be celebrating their three years in office very soon. I wonder will the rest of the nation be celebrating in the context of what we are discussing here at present. We are discussing an agency which may borrow for the payment of loans for the construction of houses. If I look at a document such as the Annual Bulletin of Housing Statistics, incorporating the quarterly bulletin, ended 31 December 1984, published by the Department of the Environment which deals specifically with the Housing Finance Agency and their input since their inception in 1981, I have the gravest of doubts about the attitude of Fianna Fáil then. What we said in 1981 is a matter of record, that it appeared to be a good housing finance funding operation. Having said that, it is interesting to read this document published by a Department of Government. It demonstrates the decline in the building industry including within that decline the growth of the Housing Finance Agency and the decline of other areas of housing endeavour. While the Housing Finance Agency may be seen as a qualified or unqualified success, depending on one's point of view, the Government have presided over one of the most savage attacks made on the most fundamental industry to our economic well being, the building industry. I know I am travelling the long way around to the quotation which will assist me in exposing the most extraordinary, phantasmagorial contributions of a number of Government Deputies, particularly in the Fine Gael interest.

According to the Annual Bulletin of Housing Statistics in 1977 the total number of houses completed was 24,500. In 1978 the corresponding number was 25,500; in 1979 26,500. Then in 1980 there were 27,785 houses completed. In 1981 30,000. I pause there because as we know the legislation setting up this agency was introduced in this House in 1981. We are aware also that this Government came into office at the end of 1982. It should be remembered that at the end of 1981 housing had reached a peak at 30,000. The Government programme on housing was a predicted outflow of 30,000 units per annum. We move on to 1982, remembering that the total housing to be provided by this Government under their Programme for Government was to be 30,000. In 1982 the figure was 26,798; in 1983 a total of 26,138 and in 1984 24,944, say, 25,000 as a sop to the Government. Therefore this Government have presided over a rapid decline in house building since they assumed office.

The consequences of what they have done to the building industry, in terms of the economic health of this nation, cannot be over-emphasised. In my clinics, in my daily contacts with constituents, indeed with people outside my constituency, in my contacts with people interested in the future welfare of this nation, with people interested in the building industry and the employment that industry gave under successive Fianna Fáil Governments, the sad story is that the house building industry is in decline. Now we are meant to give three cheers for the Government; they are increasing the Housing Finance Agency borrowing requirement from £200 million to £500 million. We are meant to give them all the plaudits in the world.

If one resorts to this piece of wisdom from the Department of the Environment, the Annual Bulletin of Housing Statistics to 31 December 1984 it will be seen that that document reveals the fraudulence of people who come into this House and maintain that the building industry is not in decline. Whether they are on the Government or Fianna Fáil side is of indifference to me but, unfortunately, it must be said that the people who have the power with responsibility, are those from the Government side. We have no power but, as an Opposition, we do have responsibility.

The party opposite have neither power nor responsibility and when they had the power they were irresponsible.

This is a publication produced by the Minister for the Environment. I am just quoting from it.

Very selectively.

The Deputy is imputing base motives to me.

Deputy David Andrews without further interruption.

I am not in this House to mislead. I went to the trouble of going to the Library, seeking a publication produced by the Minister for the Environment. Set out in that document are the number of houses that have been built from 1977 to 1984, which shows a rapid increase up to 1981 and then zoom, down the watershoot. The building industry has become a thing of the past under the present Coalition Government. It is extraordinary that successive Coalition Governments always have presided over the decline of the building industry. Its consequences are immense, not only for those people directly involved, the general operatives, the legitimate builders be they large or small, but in addition, there are the spin-off effects on the community. The fact that this Government have presided over the death of the construction industry constitutes one of the great tragedies of this Government. All the Housing Finance Agency Bills in the world — well intentioned as they are — will not get away from the fact that this Government presided over an annual decline of something in the region of 5,000 houses per annum.

The party opposite did away with construction grants when they were in office.

Then we will go on to the grants——

Would the Deputy please remain with the Bill?

There was very considerable latitude given to previous speakers. I do not intend——

I do not mind passing references.

The house improvement grants were mentioned as was the £5,000 grant. That £5,000 grant is a good one if properly administered. One of its inherent problems, however, is the hardship it causes in the context of bridging loans. What action can be taken to cure that problem? Deputy Yates, in his very intelligent contribution, put his finger on the problems and the Minister should take note of what he said. I do not intend to repeat it but he put it very well.

I wish to return to the quotation I intended making in relation to the sources of finance for completed houses.

At page 1 (a) of the bulletin to which I referred it states that the figures for local authority completed houses for 1981 was 5,284. For 1982 the figure was 5,725 and for 1983 the figure was 4,340. The figure for 1984 was 3,700 and if Deputy Allen suggests that I am misrepresnting the position I will give him the bulletin before he makes his contribution.

In relation to the Housing Finance Agency, the figure for 1982 was 393, for 1983 it was 1,263 and for 1984 it was 1,760, which shows that the Housing Agency is working ——

Despite all the opposition to it.

Sometimes when legislation is introduced in this House there is constructive criticism and that is different from trying to destroy its introduction. Even if one is wrong in public life it is no harm to admit it and if the Deputy wants such an admission I will make it.

Would the Deputy make such an admission on behalf of the party?

The rest of the party are well able to maintain their own position on anything which comes before this House. I am speaking purely as an urban Deputy. I do not have any special status, I just make my contribution.

Local authority sources of finance for completed houses reduced in number from 1982 to 1984 while the numbers in the Housing Finance Agency went up. Perhaps the Minister could explain that as mathematics and statistics were never my strongest subjects. Maybe one of the Minister's civil servants could peruse the bulletin from which I quoted and assist us in relation to the figures.

The Deputy should give us the local authority housing figures.

I am talking about the total figures in relation to the years 1977-84. The Minister can study the figures and determine whether I have misrepresented the situation, whether I have totals wrong and if the Bill will improve matters. Perhaps the Minister will say that everything in the housing industry is rosy and that the Housing Finance Agency will take care of many of the problems which Deputies deal with on a daily basis. Unfortunately, the housing construction industry is in a shambles although not from the want of will on the part of builders. The Government recently introduced a number of schemes which we were told would help, including the grant of £5,000. We were told that housing improvement grants would also help and although it is a good scheme I wonder if it will operate successfully or grind to a halt because of the impossibility of administering it due to lack of personnel. It is the good news always followed by the bad news and the Government are notorious in that respect.

For the sake of accuracy and the protection of my word, perhaps the Minister will support me in my analysis of the decline of the building industry as outlined in the Government publication produced by the Department of the Environment. I appeal to the Government to look at the cost of land in the Dún Laoghaire area and to recognise that it is prohibitive. The cost is interfering with progress in building local authority houses. We have effectively run out of building land in the borough and we are now moving into the county. The Government, via the local authority, must provide adequate housing for a very quickly expanding population by providing moneys to build houses for single and old people ——

That is outside the scope of the Bill.

With your permission I will make a passing reference ——

A passing reference only.

We should look at the whole concept and philosophy regarding the modernisation of existing houses. So much can be done by local authorities in restructuring housing building stocks. We have terrific houses which, unfortunately, have become dilapidated and in many instances it would be cheaper to modernise them then to knock them and rebuild. We should also give incentive to local voluntary agencies——

How long more will this passing reference last?

We should have serviced sites for co-operative housing organisations. Perhaps the Minister would also give some thought to the provision of short term accommodation for the homeless in the form of hostels and low rent accommodation for newly married couples who at present start their married life in Rachman-type housing accommodaton which prevents them from buying their own homes for years. Unfortunately there are many people who cannot provide their own houses. They are excluded from local authority housing, they cannot afford private housing and they have to go into prohibitively priced flats. Anything that could be done to help them would be a piece of social philosophy which this Government preach but do not practise.

I welcome the Bill. Obviously Deputy Andrews has not been listening to his own colleagues. I listened to the speeches very carefully and the majority welcomed the Bill with very few qualifications. Deputy Molloy was among those who welcomed the Bill. I should also like to point out that the concept was one brought forward by Fianna Fáil.

The need for the type of housing provided under the auspices of the HFA loans is quite obvious when one looks at the amounts made by way of loans in the past few years. In 1983 the amount was £55 million, in 1984 it was £72 million and in 1985 it was £86 million. This indicates the growing demand to provide not houses or investments but homes.

I should like to compliment the HFA particularly on their sale of index-linked stock in what can only be described as very unfavourable times and bad market conditions. I hope the downward trend in inflation will enable them to sell more stock issue at a lower cost. It is to be hoped that in the short term bank borrowing by the agency will be phased out as soon as possible. I regard the HFA borrowing from the banks as something like a bridging loan: it is something in which they should not become involved if possible. They should revert as quickly as possible to index-linked stocks. In the report for year end 1984 the HFA requested the Minister for Finance to grant them concessions under section 79 of the 1976 Act dealing with corporation tax. They requested that they be allowed off some 35 per cent corporation tax and I am delighted that the Minister has done this. It means that the money that would normally go back to the Department of Finance remains with the HFA and gives more money for borrowing purposes.

In the past few years the HFA have helped hundreds of families to own their own homes. The concept behind it was not for investment purposes but purely for the provision of homes for those who otherwise could not afford them. I will give some figures in relation to Galway city, which area I am familiar with as is Deputy Molloy. To date 150 loans have been allocated which approximates to £3 million in the housing construction sector. This is a substantial investment and can only be described as good news especially for the building industry to which Deputy Andrews referred. I have always admired the way Fianna Fáil appear to take the building industry under their wing, or at least attempt to do so through propaganda rather than actual works.

The greatest beneficiaries of HFA loans have been local authority tenants. Coupled with such loans the £5,000 grant for these tenants has meant that there are many local authority houses available for those on the housing waiting list. In the past year in Galway city 30 such dwellings have been made available and 52 applications have been approved. If one takes 52 houses each at a cost of £32,000 — a moderate amount — this equates to £1.8 million that has gone back into the construction industry. This is at a cost of £250,000. What has been done in this area is a great fillip for the construction industry and there is no way the Members opposite can ignore it.

Will the Deputy tell the House how it goes back into the construction industry when they are all buying secondhand houses?

The Deputy should talk to those in the building industry in Galway. They have informed me their problem is that the secondhand house market is the greatest market. The reason is simple. The fact is that a certain lending agency, a building society, provide approximately only 80 per cent of loans for firsthand houses. If fault should lie anywhere it should lie at their doorstep.

Let the Deputy talk about the HFA. They give about 58 per cent of their loans for secondhand houses.

It is the choice of people.

There is a worry facing applicants for HFA loans because of the insecurity of inflation rates. In the term of this Government people do not feel insecure because inflation has dropped dramatically from the 20 per cent range down to single figures. However, they are frightened that a return to Government of the Opposition would mean higher inflation and, therefore, their repayments would be increased accordingly. This Government, quite rightly, have seen as one of their priorities a reduction in the rate of inflation thus ensuring, inter alia, that the interest rate on HFA loans is very attractive; but those borrowing loans are fearful that perhaps in the future a Government would push the inflation rate into double figures because of their ill-considered economic policy. The Deputy will recall that this was done in the period 1978-1980. Loan applicants need have no worry on this score while this Government are in office.

I suggest that an undertaking be given to people having HFA loans that the interest rate would have an upper ceiling, linked perhaps to building society rates. Such a mechanism would operate if inflation rocketed. The interest on HFA loans would not exceed building society rates by more than 2 per cent. Of course this would involve the State in giving a subvention to these people but there is nothing new in that. Building societies have received subventions in the past and people with SDA loans have also been beneficiaries of State funds. These suggestions would eliminate long-term worries for people with loans.

There is also the matter of tenants who give back their dwellings to local authorities for no compensation. If these people buy a new house they do not qualify for the new house grant of £2,000. The reason given by the Department of the Environment is that they owned a previous dwelling. However, they were not given any money by the State when they purchased the local authority house and they will not get the £2,000 grant on buying a new house. Neither will they get compansation for payment of legal fees in connection with the transfer. These people are the only category who do not receive the new house grant and I ask the Minister to amend the regulations to take them into account.

The £2,000 house grant is deducted from the HFA loan. This could be all right if a person is on the maximum income but a person on the lower income could find this the straw that broke the camel's back. Perhaps the Minister would consider giving a person on the minimum income the total grant of £2,000 with a pro rata payment to others. In other words, it should not be taken into account as part of the loan. When an applicant receives, say, one-third of the total loan — this is usually when the roof is put on the house — he or she is required to commence the repayments the following month. These are the minimum repayable amounts on a full loan even though the person has not received the full loan at the time. For example, an applicant who is approved for a £24,000 loan will be required to pay a minimum repayment of £200 per month. If he were to receive a first instalment of, say, £8,000 he would be liable to commence repayments at £200 per month as if he had received the total amount of the loan. This can be a burden when one considers that the person can still be involved at that stage in completing his dwelling. I suggest that the HFA insert a condition in the deed of charge so that an applicant would be liable only for interest on that portion of the loan he has received as opposed to being charged on the full amount at that stage.

The monthly repayment on the £8,000 advance would be between £75 and £80 as opposed to the £200 that must be paid if interest is charged on the total amount. I am calculating that on an interest rate of between 10 and 11 per cent.

As set out in the present application form, interest payment is required to be made in respect of the full amount being borrowed. I trust the Minister will take this factor into consideration in order to help those who need these loans next. A procedure whereby a borrower would be asked to repay the interest each month on the portion of the loan he had received would be similar to the scheme operated in respect of an SDA loan and that would be more equitable in every way.

I trust that the various points I have made will be noted by the Minister.

Most of the points I had intended raising have been made already so I shall not deal with them.

The Housing Finance Agency scheme though much criticised since its establishment, is most attractive. Its success can be gauged by the number of houses that have been built with the help of the scheme. However, this scheme could be rendered more attractive if a number of steps were taken. For example, regarding the administration of the scheme and the bureaucracy, when a local authority requisition a loan there is a delay between the date of the request and the sending of the cheque of between four and five weeks. That period could be shortened considerably. People will be on bridging finance during that time and this can cost between £60 and £80 per week whereas they would be paying about £20 per week on their agency loan and that would be the amount they had budgeted for.

The whole question of bridging finance has been dealt with by previous speakers and I shall merely make the point that this factor is a deterrent to people to avail of the scheme. I have known of hundreds of people who would have sought HFA loans had it not been for the difficulty of bridging finance. There must be some solution to this problem. Why, for example, can local authorities not accept letters of undertaking in relation to title from properly indemnified solicitors? In other words, if a solicitor gives an undertaking that a title is in order and if he is insured properly against negligence, that should be sufficient for the local authority to accept the undertaking and to pay out. This would overcome the whole question of the examining and registering of title by local authorities. There is considerable delay in sending the documentation to Dublin and waiting for its return. Overcoming that problem would be another step in making the HFA more attractive.

Surely, too, the Minister could put pressure on the banks and the building societies to accept such letters of undertaking. If a solicitor is paid up to £700 for undertaking a conveyancing, should his professional judgment not be taken into account as a backup to the documentation being supplied to a lending agency? Dealing with this area, too, would eliminate another major obstacle in the way of people who are deciding whether to purchase houses. These are the kinds of questions I have been trying for a long time to have answered. As the body responsible, the Department of the Environment should provide some of the answers. If there are regulations preventing local authorities from paying out on foot of letters of undertaking, these should be changed.

Another matter that has become more prevalent in recent times is the lack of protection for those who embark on house purchase. There is very little protection for them in their contract. As builders increasingly go to the wall, house purchasers are being left with useless pieces of ground and very often with no title. This, too, is an area in which the Department should interest themselves. This would be another step in encouraging people to buy houses for themselves, either with the help of the HFA or of some other schemes. I have written to the Construction Industry Federation on this matter of the lack of protection for purchasers so far as members of the confederation are concerned. I have written in this context, too, to the Law Society but everyone passes the buck. Surely that buck must rest with the Department. In conjuncton with the CIF the Department devised a scheme whereby house purchasers are protected against structural defects. My information is that that scheme is well funded, that its liabilities are small in terms of money, while its funds are large. I should like to hear what is happening to the many millions of pounds that are in that fund. Could that scheme not be extended to include builders who go into liquidation or who for one reason or another go out of business, leaving the clients without protection?

In a submission from the Department in 1975 the then Minister said that concern had increased because of instances of insolvency and of misrepresentation by private house builders and that this resulted in hardship and financial difficulties for people buying houses. That was during the run up to the establishment of the national house building guarantee scheme but the Minister's suggestion was never taken up by the CIF. It comprises the people in the industry making decisions. The Minister has very little input, while the consumer has none. Therefore, there is a crying need for the replacement of that scheme and for the setting up of a national housing council which would incorporate a guarantee against structural defects and against a builder going into liquidation. This would be a good day's work, on the part of the Minister and would result in many people, in my constituency anyway, regarding house purchase as a far more attractive proposition.

I should like the Minister to tell us what response he has had from the construction industry in relation to these problems. In response to my inquiry to the Law Society in early October. I was informed that while the society agreed fully with my sentiments the matter was one for the CIF and the Minister and that they would welcome any review of the provisions of the national house building guarantee scheme — I will not bore the House by reading the complete letter. I wrote to the Construction Industry Federation and they gave me four very good reasons why they could not set up a protection scheme against insolvencies and builders going out of business.

A passing reference only.

This is very important. People are afraid to buy a house because of the legal problems and costs attendant on it. I believe if there was a will to get over these problems they could be solved. I urge the Minister to ask how the money, which is available to fund the national house building guarantee scheme is being used at present, where the interest is going and why can we not extend the scheme and use the money to fund a scheme protecting the purchaser against building companies going out of business. If there was a co-ordinated effort and a will to get over these problems we would have a far more attractive scheme, the Housing Finance Agency scheme would be even more attractive, and there would be more demand for new houses with a resultant rise in the house building programme.

Deputy Andrews should have taken that into account when he spoke about figures dropping. Because of the recession, figures are dropping, demand for all kinds of commodities has dropped and house purchasing figures have dropped because people have to pay conveyancing fees; they have no choice, it is a monopoly; they have to pay surveyors fees if they go to a building society, another monopoly; they have to take out insurance with a building society, another monopoly, and so on. If they buy a house through the SDA or HFA loan scheme, again they meet vested interests, and nobody is willing to make a move. The onus is on the Minister to be a catalyst to bring about a major change. Then people will buy their houses.

One could accept that the Housing Finance Agency has improved its image over the past two years, more than can be said for the present Government, with the small staff operating efficiently, cutting out the red tape of bureaucracy to which we have become accustomed when dealing with State or semi-State bodies, but we should not think that the Housing Finance Agency have solved all the problems of the construction industry.

The building industry is in a depressed state with thousands of skilled and unskilled workers on the dole queues. Since the Coalition came to power there has been 25 per cent to 30 per cent job inactivity in the building industry. We had the Taoiseach's famous words "dusting off the JCBs" but unfortunately nothing has happened in that area. We had the 100 per cent VAT increase, which struck the building industry a killer blow, and many building firms have gone out of business. This Government, and every Coalition Government, seem to seriously dislike the construction industry.

If the new increased powers for borrowing allocated to the HFA mean a change of direction, then we must welcome them but piecemeal attention to the industry is not acceptable. Co-ordinated plans for its development should tie together all the agencies. On the one hand, the Government are making grants and loans available and, on the other, they have increased VAT by 100 per cent, reduced the capital programme for the construction industry and there has been a reduction in the number of local authority houses. Hardly an imaginative way to tackle the problems facing the construction industry.

In many areas, there is a serious question mark over the Housing Finance Agency loans. Many politicians, including Fine Gael and Labour Deputies, advise people to run a mile from HFA loans because of the fluctuating interest rates and other related problems. One speaker today mentioned that there has been a great demand for these loans, but many people have no alternative because a person earning over £8,000 does not qualify for an SDA loan. Many people cannot get a bank or a building society loan, and have no alternative but to seek an HFA loan. The HFA loan does not suit the low wage earner. If he gives up a council house he will get a full loan, but if he has a small income and lives in a flat he will get two and a half times his income. This will in no way meet the present cost of a house.

Secondhand houses cause major problems because there are no grants available and this makes it very difficult for people to acquire such houses. The Minister should look at this area. We have heard a great deal of talk about grants over the last few weeks, but people not living in local authority houses and wanting to buy a secondhand house are being unfairly treated. Grants should be available for secondhand house purchasers.

The decision to grant HFA loans should be made as quickly as possible because the cost of bridging finance is outrageous. The delays between making an application, having it processed and the money being given to the applicant, is causing serious hardship for young couples. In my view the banks should take up some of this responsibility. The banks are charging outrageous interest rates on bridging finance. At a time when there is so much talk about the depressed economy, the banks should make bridging finance available at lower rates. They are bleeding the young people. This is another area where the Minister should enter into negotiations with the banks to make bridging finance available at low interest rates.

People who are unemployed or on sick leave but have HFA loans still only have to pay 20 per cent of their incomes. This is a very good provision. At present many people on SDA loans have serious problems making their repayments if they have lost their jobs or are not employed because of illness. I know of many cases where people had to sell their houses and go back on to the local authority housing list because they could not meet their SDA loan repayments. I welcome the provision in the HFA scheme which helps such people while still recognising that they will have to pay at the end of the day. That too may cause problems, but it at least alleviates the hardship imposed at present.

This scheme is to be welcomed but I do not think it will solve all the problems as the Minister and the Government would like us to believe.

I thank all the Deputies who contributed and showed interest in this matter. While this is a fairly modest Bill proposing technical adjustments, it has given the House an opportunity of touching on wider questions on the progress of the Housing Finance Agency. It continues to attract considerable public interest as is demonstrated by the very strong demand for loans. The provision of mortgage finance for housing, particularly those on modest incomes, is a matter which affects the vital interests of a great many people. The Government are concerned that all necessary steps are taken to ensure a continuing adequate supply of such finance.

The measures proposed in this Bill and explained at the outset are urgently required to ensure the continuing smooth functioning of the Housing Finance Agency. Deputy Molloy in his contribution ranged widely over the housing and construction industry in general. Much of what he said strayed somewhat from the proposals contained in the Bill. The Deputy attempted to belittle the achievements of the Government in the housing area and to detract from the substantial advances made by the Government.

It is now 7 p.m., so I would ask the Deputy to move the adjournment of the debate.

Debate adjourned.
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