Dáil Éireann debate -
Wednesday, 9 May 2001

Vol. 535 No. 5

Written Answers - Land Acquisition.

John McGuinness

Question:

142 Mr. McGuinness asked the Minister for Agriculture, Food and Rural Development if he will investigate the amount of money owed to his Department by persons (details supplied) in County Kilkenny; the reasons £27,256.80 is outstanding, despite previous payments of £31,672.95 against an original advance of £13,607; if he will now strike out the balance; and if he will make a statement on the scheme and justify the amounts being demanded. [13142/01]

Minister for Agriculture, Food and Rural Development (Mr. Walsh)

The lands in question were allotted to the persons named under a purchase agreement dated 21 December 1979. The cost of the land was £13,607 and it was to be repaid over 28 years by an annuity of £2,075.08 in half-yearly instalments of £1,037.54, the annuity rate was 15% and the interest rate was 15%. At the end of 1992 they had paid £22,190.85 by way of repayments and additionally they had arrears of £4,841.89.

A special buy-out scheme was introduced by the Government in the spring of 1993 under which annuitants were allowed to redeem their annuities at a discount of 50% on the capital outstanding provided that any arrears of repayments were also paid. The amount required to avail of the scheme in the case of the persons named was £11,867.59 including the arrears of £4,841.89. They did not accept the offer and, under the terms of the scheme, their arrears of £4,841.89 were capitalised and added to the full November 1992 redemption price of £12,082.52 to give a new advance of £16,924.41, which is repayable over 28 years by a reduced annuity of £1,360.70 in half-yearly instalments of £680.35, with an annuity rate of 8.04% and an interest rate of 6.79%. At end February 2001 they had paid £9,482.10 by way of repayments and additionally they now have arrears of £2,083.85.

The present cost of buying out this annuity is approximately £17,000 including these arrears. I have no statutory authority to write off this amount or to accept a lesser sum by way of settlement.

While payments totalling £31,672.95 have been made to-date in this case, it should be noted that in effect two loans have been made and the annuity rate has been reduced from 15.25% to 8.04% thereby extending the repayment period of the second loan. The general position with annuities is that the lower the annuity rate the longer the repayment period and they are similar to house mortgages in that the amount to be repaid is inevitably more than the amount borrowed.