Dáil Éireann debate -
Tuesday, 6 Jul 1993

Vol. 433 No. 5

Adjournment Debate. - Tenant Purchase Scheme.

Mr. Crawford

I am very pleased to learn that today the Minister announced a new tenant purchase scheme. Tenants were looking forward to having an opportunity to purchase their own homes. The previous 1988 tenant purchase scheme allowed some 500 families in my constituency to purchase their own homes, which is something that Irish people are always proud to achieve.

I support this new Bill. It is welcome that there will be no fixed closing date, as this avoids putting families under pressure to meet a specific date. The setting of a fixed interest rate is also important in that families on low incomes can budget for their repayments over a 20 year period. However, I predict there will be major disappointment at the level of discount being allowed compared with that under the 1988 tenant purchase scheme. Many of the people who contacted me to press for the introduction of this scheme believed that its provisions would be similar to those in the 1988 scheme arising out of the promises made in the course of the general election. People expected a similar scheme and will be gravely disappointed. Some people will not be able to participate in the scheme but those who will may have to borrow from local authorities. There was no reference in the Minister's announcement to the fact that such families or buyers will be able to avail of first time buyers' housing grants which, I understand, were made available to participants of previous schemes.

I predict that the Minister's statement that local authorities will be given a capital injection following the introduction of this scheme will not be realised. The Minister said the scheme would boost the provision of new dwellings and the improvement of existing ones. However, it must be remebered that local authorities will no longer receive rents on such dwellings. Most of these dwellings will be bought out through the use of local authority housing loans. Taking into account the costs of the local authority, the net income from these sales will be less than half the value of such dwellings, that is, if the local authorities do not have to advance loans.

The position in regard to the homes of single parents and so on is not clear. The Minister said that homes for the elderly would not come under the provisions of this scheme but some of them are being used by single parent and young families who, perhaps, should be allowed participate in the scheme.

If there is money available for house repairs I would make a special plea for one house in Monaghan, bought under a tenant purchase scheme as long ago as 2 July 1975, by a couple who were bombed out of their home in Fermanagh Street — which may be relevant to some of the television reports this evening — and promised at that time that cracks in the walls would be repaired. Despite much effort by this widow — her husband died in an accident — nothing has been done. She borrowed money from the local credit union to instal central heating and has had windows and doors fitted. If there is one penny available under this scheme for repairs in Monaghan this house must be given priority. The Minister of State should use his influence to ensure that work is carried out.

While welcoming the scheme and hoping its provision will appeal to many applicants I doubt that the funds the Minister suggests will be available for new houses and repairs of others will be forthcoming.

Minister of State at the Department of the Environment (Mr. Stagg)

I thank Deputy Crawford for raising this issue and giving me an opportunity to outline, in the short time available to me, some of the details of this latest local authority tenant purchase scheme. Full details were announced today. They are available in the Dáil Library and were sent to Members.

This afternoon I announced the introduction of a new tenant purchase scheme for the sale of local authority dwellings to tenants. Tenants to local authority houses and flats, who have held a tenancy for at least one year, may now apply to purchase the dwellings in which they live. The principal terms of the scheme are the purchase price of the dwelling will be its market value in its present state of repair as determined by the local authority; a discount of 3 per cent will be deducted from the market value of the house for each year of tenancy subject to a minimum discount of £3,000 — equivalent to the new house grant — and a maximum of 30 per cent; houses and flats will be sold under the scheme excepting dwellings provided for and occupied by elderly persons and demountable/mobile dwellings — a local authority may, at its discretion, also exclude dwellings because of their structural condition or if it has proposals to carry out remedial works to them. Houses designed or specifically adopted for persons with disablements are also included; also houses occupied by single parents — though originally designed for old people — will also fall within the provisions of this scheme. Under the scheme the purchase price will be payable at the point of sale; stamp duty is not payable on the sale of the dwelling; legal and transaction costs associated with the sale of the dwelling to the tenant will be borne by the local authority; the costs associated with the mortgage loan will be borne by the purchaser; and the scheme will be ongoing with no fixed closing date.

The scheme differs from previous schemes in two major respects. First, the current scheme is a permanent one which does not have a closing date which was a normal feature of previous schemes. It will operate until a new or revised scheme is notified to authorities. Therefore, tenants who cannot afford to purchase at present will be able to apply to do so in their own time, and as their circumstances allow, without being constrained by any artificial cut-off point.

Second, for local authorities the immediate capital injection received by full payment of the purchase price at the point of sale will boost the provision of new dwellings and the improvement of existing ones.

My Department has held discussions with the commercial lending agencies who have agreed in principle to provide mortgage finance for tenant purchasers. If a purchaser does not get a loan from a building society or bank he or she has the option of applying to the local authority for a loan.

In addition to the generous discounts available, the overall cost to the purchaser is further reduced in a number of ways. The exemption from stamp duty represents a significant saving while the legal and other costs of the sale of a dwelling will be borne by the authority. Purchasers may also qualify for the usual income tax relief on mortgage interest. The costs associated with the mortgage will be borne by the purchaser but where possible, will be rolled-up into the loan.

In this new scheme, our aim is to achieve a balance between the desire of tenants for home ownership and the ever present need for accommodation of applicants on local authority waiting lists. The sale of a large number of dwellings at greatly discounted prices could not be justified at a time when the size of the local authority waiting lists requires an expanded housing construction programme.

The new tenant purchase scheme is further evidence of the Government's commitment to the encouragement of home ownership which is a key factor in the stabilisation of housing estates and in promoting a better quality of life for the community as a whole.

I hope that many tenants will purchase their dwellings under this attractive new scheme. I am confident that the scheme launched today will be successful in achieving its objectives and will herald a new phase of life for the tenants and their families who avail of it.

My Department is issuing explanatory brochures on the new scheme to all housing authorities. Tenants wishing to apply to purchase can obtain all the necessary details from their housing authority.

Deputy Crawford will find there will be widespread acceptance of and welcome for the scheme. If the Deputy contacts me about the case to which he referred, I will see what I can do to assist that person.