Seanad Éireann debate -
Thursday, 28 Jan 1988

Vol. 118 No. 6

Housing Finance Agency (Amendment) Bill, 1987: Second Stage (Resumed).

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

Mr. Fitzsimons

I welcome the fact that the essential repair grants are to be continued. In the different counties we have small groups of permanent or semi-permanent staff who carry out those repairs. This is giving employment. Perhaps the Minister might feel that it would be possible to advance extra funds to increase the size of these units so that more work could be done and so that the work that has to be done could be done faster.

With regard to the disabled person's grant, I also wish to compliment the Minister. Great work has been done in this area. The maximum disabled person's grant at present is £5,000 or two-thirds of the estimated cost, whichever is the greater. When we are dealing with renovations or extensions simply to cater for an individual who has been certified by the county medical officer as unfit and requiring specific alterations or extension to a building, the grant may be considered fairly generous. However, in some cases £5,000 might not be sufficient to cover all the work, particularly in rural areas. I mentioned this previously in the House. Where septic tanks have to be provided the cost can be considerable. At present the planning authorities are very strict about septic tanks and the provision of percolation areas and other details. Where it is necessary to provide a septic tank it is also necessary to obtain planning permission.

On previous occasions I appealed to the Minister to consider the possibility of helping with the costs involved in obtaining planning permission. The actual plans may not be all that costly. I am sure the Minister is aware that the 25-inch map which it is necessary to get in order to prepare a site map costs £33. That kind of money is outside the reach of many people who will be availing of the disabled person's grant. The cost of obtaining planning permission where this is necessary — and we must remember it is only necessary in a rural area where a septic tank has to be provided — should be included in calculating the amount of the grant. This would be to the benefit of the applicants and the local authorities. In many cases the local authority could help by providing the ordnance survey maps. In Dublin the local authority provide plans.

The normal procedure is to decide on what is necessary and provide the plans so that these works can be carried out. I see no reason why this could not be done on a national basis. It would be very helpful particularly to the kind of person who avails of those grants. They are mostly elderly people and always people who are unwell and have some health problem. They are not familiar with the regulations. They are not familiar with what has to be done in order to proceed with the work. This gesture would be appreciated very much. Perhaps the Minister could take into consideration these problems and simply allow the cost of obtaining the permission to be included in the grants.

This is a short Bill but one on which I could speak for a long time. I have covered everything I wanted to say. I appreciate that the total amount is being doubled from £500 million to £1,000 million. This shows the Government's commitment. I have no doubt that, because of the way the Government are tackling the problems, in a short period we will have a turnabout and the building industry will come back to where it was some years ago. This Bill will play a big part in bringing that about. I warmly welcome it.

Sitting suspended at 1 p.m. and resumed at 2 p.m.

Mr. Hogan

I welcome the statement by the Minister of State to the House on the Housing Finance Agency (Amendment) Bill which we are discussing. It is ironic that we should be discussing the affairs of the Housing Finance Agency and extending its powers when one considers that perhaps the Government were a little reluctant to take on board such a proposal when it was introduced in 1981. It certainly shows the enlightened approach adopted by Fine Gael in the housing area over the years and in using a source of funds for loans other than those directly from Exchequer resources.

The extension of this area is to be welcomed. Giving more borrowing capacity to the Housing Finance Agency into a wider number of areas is something which I very much welcome. I suggest to the Minister, at a time of serious financial shortage in terms of direct Exchequer resources and considering the Exchequer borrowing limits imposed by the Minister for Finance, that the source of these funds could be extended to even more areas than he has provided for in the Bill.

More use can be made of insurance bonds and life pension funds. That source of revenue could be tapped to a greater extent in providing more public utilities, particularly those that come under the aegis of local authorities. I am speaking, for example, about using a source of funds like that for the provision of water and sewerage services and roads so that the private pension contributions which have been made by policy holders over the years can be utilised at an attractive marginal rate of interest and return to the insurance companies themselves.

Over the past year or so with the welcome reduction in mortgage rates and interest rates generally, the concept of endowment mortgages has certainly caught the imagination of many policy holders particularly those on the higher tax rates. The concept of endowment mortgages or using the tax system in a tax efficient way, the relief that can be made available to mortgage holders in order to give them extra benefits in terms of mortgage interest free relief but, as well as that in terms of tax relief on life assurance premiums, is an area the Minister should take on board and promote probably to a greater extent than his Department have promoted in the recent past.

Anywhere we can get funds other than from the taxpayer directly is certainly something that I would consider very important at present. The powers of the Housing Finance Agency and the moneys borrowed under that agency can be used to help many voluntary groups throughout this country who are doing excellent work in the provision of voluntary housing projects particularly for the elderly. I hope that funds can be made available directly, even though they may have to be administered through local authorities, so that that source of funds would be available to voluntary groups in order to accelerate much needed voluntary activity in many parts of the country.

I know the Leas-Chathaoirleach has a very great interest in this voluntary housing area and I am sure he would support any proposal where funds of the Housing Finance Agency would go towards that area. Borrowers were not happy with the announcement on 28 October 1987 of the change in the amount of funds through the borrowing medium of the Exchequer that would be made available to local authorities. The initial announcement could have been made earlier in order to give local authorities a time to adjust to the new system, where banks and building societies were now assuming a greater role in the provision of funds to borrowers and to people who would normally go to local authorities for their loans.

The danger at the time — it is certainly only beginning to sort itself out at the moment — is that borrowers were perceived as crawling to financial institutions in order to get a letter stating that they were not in a financial position to get a loan from that society. I thought it was degrading to loan applicants at that time to have them put in the position that they had to go directly to the banks and the building societies and come back with a letter of refusal in order to qualify for a loan directly from the local authority. I know, from my own experience in Kilkenny County Council, that the housing officer takes it upon himself to arrange with the bank manager or the building society to establish if the loan applicant is eligible under the various financial requirements to get a loan from that source. The degrading act of the loan applicant going directly to the financial institution is now eliminated by the fact that the housing officer acts as the mediator in this case and the letters come, if required, without any degradation to the applicants involved. The Minister, by having meetings with the banks standing committee and the building societies, that the system he was promoting and which was welcome in view of the savings in borrowing to the Exchequer, should have been streamlined better. It is only now that it is beginning to sort itself out. The hiccups we have had over the last few months could have been eliminated.

With regard to the provision of housing, I am glad the Government have now decided in the budget to reverse some of the serious trends they were promoting in last year's budget in regard to the building and construction industry. Section 23 is important to the provision of private rented accommodation. I hope, together with the urban development areas the Minister has designated and extended to various towns and cities throughout the country, that it will provide an important incentive. It is an extension of a scheme we brought in when we were in office and is something that was described at that stage as a cosmetic exercise but is now being perceived as something that is worthwhile.

The service sector and the retail sector should not be eligible for any incentives under the urban development areas extension the Minister announced some time ago. In the inner cities and the centre of many towns there are multiples grabbing some of the prime property in the inner cities to the detriment of the local traditional small grocers and retailers who have been there with their family business over a lifetime. I support the concept of getting rid of the enormous amount of dereliction in many of our cities particularly in Dublin and Cork. In the rural towns we should consider extending the incentives for manufacturing and housing development. In the commercial area we would want to be careful that we do not close down other sectors and family businesses that have served our towns well over the years.

We have a very haphazard approach to housing. I hope the Minister will consider putting his views in a White Paper or a discussion document in the near future in order to let us know where the Department of the Environment and the Government stand in relation to the development of housing. I was sorry to see the enormous cut that was made to local authority housing programmes in the 1988 Estimates. We have £50 million less to spend in the provision of local authority housing. In Kilkenny no housing start is foreseeable in 1988. The indications are that we may not have a housing start of any significance in 1989.

The danger in that is that we are building up housing lists again. We spent a number of years trying to eliminate that poverty trap, trying to provide decent accommodation and not have couples with three or four children living in squalor. I am proud of the last Government's record in taking that housing problem off the agenda of all the national media in this country because the problem was resolved with the enlightened approach of incentives, grants and direct financial Exchequer support to local authorities in eliminating that problem.

The £5,000 surrender grant was an exceptional success. I am taking into account the comments the Minister has made about it, that it could denude some areas and ghettoise a number of housing estates in removing the people with the most money from that housing scheme, in other words, that it would reduce the mix in housing development in urban areas. I hope the Minister will bring forward his proposals, in the near future and tell us where he sees the housing needs, what the second hand housing situation is and how we can renew our housing stock in order to build up some kind of rational approach for the future so that we will never again have the lists we had over the last few years and the appalling conditions people had to put up with in flats in urban areas and areas of dereliction.

I want to refer briefly to the essential repairs grant scheme. In rural Ireland there are a lot of people who, with a small amount of money, could improve their dwellings under this scheme. A lot of people have benefited tremendously by way of the provision of much needed improvements such as essential repairs to windows and doors in order to ensure the most minimal thermal insulation to their dwellings. Without the expenditure of a lot of money we could extend this scheme in order to ensure that there are sufficient resources, to ensure that a survey is carried out by each local authority to establish the need for essential repairs grant and in the context of the 1989 estimates for local authorities to ensure that the Minister will be in a position to say there is a need in this area, which I know he is aware of, and that he will be in a position to move in the right direction to ensure that the rural poor and the older generation in rural Ireland who never ask for much, but who are important people whom we should not forget will be looked after. We always hear about the urban poor but we seldom hear about the rural poor. There are people in isolated rural areas who seldom come to a politician or go to a local authority to look for anything. It is our responsibility to ensure that they are properly catered for.

I would also ask the Minister to consider the unsecured loan of £2,000 which is available from local authorities for essential repairs. He should increase the amount of money one can get from a local authority from £2,000 to £5,000 because £2,000 will not do much for a dwelling particularly when there are no house improvement grants to fall back on. I appeal to the Minister to consider this and extend the facility to the Housing Finance Agency.

I welcome the Bill before the House. The Housing Finance Agency has served us well and I have no difficulty in agreeing to its powers being extended. I hope that in the future the Minister will extend more local authority financing and give, together with the local loans fund to local authorities, another source of borrowing capacity in order to develop the much needed infrastructural facilities to ensure that the housing lists and the scandals of the past can never again materialise.

Mr. Fallon

The dramatic change in the role of the agency since it was started in 1981 is obvious in this Bill. It is no harm to briefly recall what the HFA plan to be involved in in the future. A new package of loans available designed to contribute to the future housing of this nation is available now from the HFA. This is basically a broadening of the powers of the HFA to advance money to the various local authorities. The HFA can now give a loan for the acquisition of property, for improvement of houses, for the payment of essential grants for various repairs and for disabled persons. Some of these payments in the past were paid from the local loans fund. Looking objectively at the situation I believe it makes sense to put all of these various loans, this nice package that I have referred to, under the umbrella of one body, the HFA.

The various loans we speak about have been referred to by many Members. As the Minister has pointed out, these loans have changed and the role of the agency has changed widely. I must confess — I say this quite honestly — I was always one of the great fans of the SDA loan. When any people approached me about county council loans I stated quite emphatically that the SDA loan was the better loan. I was not over-impressed with the HFA introduced in 1981. Senator Doyle referred to this this morning, that there was no enthusiasm on the part of the Fianna Fáil Government towards it. I would be in that category, for different reasons from those of Senator Doyle. Throughout the country the view was that you were simply becoming a tenant of the HFA and you might as well be a tenant of the HFA as a tenant of the local authority. The problem then was that if you wanted to sell, assuming you bought you house in 1981 or 1982 for £18,000 or £19,000, you would find yourself not owing the HFA the figure you borrowed but perhaps a figure of £25,000 or £26,000. Therefore, it was not an attractive means of borrowing.

It was attractive to the kind of person Senator Doyle had in mind, that was, a person in the Dublin area. He rightly pointed out the huge waiting list. If a person living in Dublin changes his job from Crumlin to Clontarf it does not mean he has to change his house. If it happens in the rural areas almost certainly you would have to move house and from the point of view of getting the people on the waiting list into houses the HFA was attractive. It certainly took many people off the waiting list particularly in the cities.

We still have the HFA loan in the form of the income-related loan. My understanding of that from my colleagues in the housing office in County Westmeath is that they are not enthusiastic still about it. They see it not as a very serious contender for a choice of loan and it would be at the bottom of their list. They will still be saying to people who come to them that they should go for the conventional annuity loan, the SDA of the past. It now has the maximum loans of £21,000. It is not available for a single person unless he can prove he is getting married in the immediate future. In special cases the loan can go as high as £25,000. You then have the in between loan, the convertible loan which is available for all people up to £22,500. It must be converted within the five years to the annuity-type loan. That is a nice spread of loans available to the local authorities as a result of this change in the HFA Bill.

There has been criticism of the fact that the banks and the building societies are now asked to play a greater role in providing finance for people of modest means. I cannot honestly understand the criticism. The previous speaker referred to the fact that we should seek other avenues other than the Exchequer for providing funds. I agree with that in the knowledge that the banks were in the past providing money, even if they were limited amounts, for housing and, of course, in the knowledge that the building societies were set up clearly to provide money for the building of houses or the buying of houses. They were taking deposits from the many to give to the few who wanted to avail of the money for houses. They were very successful in that.

I do not see any reason why we should be worried. If the building societies and the banks enter the agreement in the proper spirit, then few people ought to be refused a loan. Under the previous arrangement a person seeking an SDA loan had to have a letter from the building society and a bank. This was a farce because the building societies simply give a letter saying, "We regret we are unable to give you a loan". You would then hand the letter to your local authority and that cleared you. The banks did the same. That was not being serious about the problem and it was acknowledged that we were not being serious about the matter.

We are serious about it now. It is a logical extension to what the building societies and the banks have been doing for years. The last speaker referred to the fact that the emphasis seemed to be on endowment mortgages. I agree that that is what banks and building societies are looking for. In regard to what the building societies are doing at present in relation to the new arrangement I have not detected any lack of spirit on the part of the banks or the building societies in regard to the provision of loans for people of modest means. I believe banks and building societies are looking after the person with modest means with the same enthusiasm as they are the person with an income of £15,000 to £20,000 per annum. They are looking for business.

It is well known that endowment mortgages in particular are being chased quite vigorously by the building societies and the banks. I know a person with £8,000 who wanted to buy a house and completed a building society application form. That application will be approved. He will get two and one-third of his income and that person is quite happy about it. That will prevail. If that spirit continues, then we should have no worries and we should not in any way criticise the banks. We should be saying it is their duty to provide us with the kind of finance we are looking for. It is a logical extension of what they have been doing in the past. The arrangement is to be welcomed.

There is one aspect of it that worries me. I know there is some form of guarantee to building societies and banks from the local authorities. I would even suggest that should not have been necessary. It should have been done freely and willingly by the banks. The banks have been looked after well by Governments over the years. The debacle over the ICI and the Allied Irish Banks a couple of years ago cost the Exchequer £175 million. That was a scandal. The bank in question got off far too lightly.

Those guarantees should not have to be there for the banks and the building societies. They should take their chances, the same as everyone else. Indeed, the guarantee in question by the local authorities will cause some problems, some extra work for them because it will involve extra inspections. If there is a guarantee for the banks and for the building societies, why not a guarantee for the local authorities if they at the end of the day have to take a person who has been refused a loan by the building societies or the banks? Perhaps the Minister will respond to that? It seems to me they should be treated in the same way.

It is an issue that we could talk about for a long time. One aspect of it I would like to talk about is the condition of housing estates. I find, unfortunately, that many of them have got into a state of disrepair. What is really happening — and I find this in my own area — is that people are becoming far too choosy about where they want to live. Those living in a caravan want to live in a beautiful house and have a view of a lake. I have seen people refuse a house three, four or five times until they got the house they wanted. In fact, what often happens is that they go to court and, as happened in my own town, the judge wanted the county manager to tell him why he would not give Mr. X a house on a particular estate in Athlone. I do not think that is fair. Once a person refuses a house and certainly if he refuses it a second time, he should go to the bottom of the list and stay there.

Another aspect of this problem is that when people are given a house, they are given time to decide whether to accept it or not. Make your offer and give them 24 hours to decide. If they do not take it within 24 hours, they are out of luck. Unfortunately, that has not happened in the past but it should happen in the future. Far too many houses, certainly in my town and in many other cities and towns, are lying idle and being vandalised beyond repair. One estate I can talk about in Athlone with certainty and, unfortunately, with regret is Battery Heights where what I have said happens. It has become a problem area, as far as financing is concerned, for the urban district council in Athlone. Indeed, I would like publicly to thank the Minister for the provision of £500,000 to carry out essential work on the Battery Heights estate. Although not essential as regards the fabric of the house it is essential to lift the morale and for the general welfare of those living on the estate. That is what we hope to do in the Battery Heights area of Athlone. We appreciate this magnificent contribution of £500,000 very much which I hope will lead to a lifting of the morale of those living on that particular estate. As I have said, it is an area which we could talk about for a long, long time.

What is important is that a fine package of loans is available for people of modest means from the HFA and that there is just a single agency providing funding for all of these loans. That was the right decision to make and it is a good forward thinking decision. The banks and building societies — I have some knowledge of this — are entering into the spirit of the arrangment and I hope plenty of money will be available for the buying, the building, and the reconstruction of houses and for grants for the disabled in the future.

I welcome this Bill and sincerely hope it will prove to be successful in the years to come.

Mr. Norris

I would like to say at the outset that it is my intention to be critical but I hope to be critical in a positive sense. I welcome very much the Minister's active and energetic interest in the area particulary of urban renewal and I believe that we may have further proposals during the term of office of this Government which will give specific direction to the renewal of inner city housing. I certainly hope so and I will be urging and pressing the Minister to take this area on board.

I would like to address not anything I see as deficiencies in the drafting of the Bill or the material it contains but something I rather regret has not been specifically addressed. I would like the Minister to contemplate either in this legislation or very soon, in the immediate future, looking at a specific problem. I am sure I will have the Minister's goodwill in this area. I speak about the question of housing co-operatives. They have been to a certain extent neglected. We do have the National Association of Building Co-operatives which is funded partially at least through Government sources and it is a very worthy enterprise. They have been involved in assisting groups in the country to set up housing co-operatives and this has been successful. There is provision for some central funding for housing co-opratives but only, I understand, if this housing is specifically intended for the disabled or the disadvantaged in some way, and this then produces 80 per cent funding from local authorities. This is, of course, welcome.

It has in certain limited circumstances been successful but I would like to ask the Minister to turn his mind towards producing a system where housing co-operatives are recognised as legal entities for the purpose of triggering funding. This is most important and I will be prepared this afternoon to give the Minister some examples from other European countries where this is currently happening. I believe the lack of such machinery is actually hampering the very useful work of NABCo. I know they are in a position at the moment to give advice, guidance and experience and they can produce model rules for housing co-operatives and so on. Over 100 co-operative, home ownership schemes have been built around the country but the real potential does not lie just in the country; it also lies in the cities. I believe the potential for urban renewal that lies dormant in an agency such as NABCo — certainly in the idea of housing co-operatives — is as yet, unfortunately, untapped simply because there is no adequate funding system for this. That means that Ireland has not been able to benefit from the housing co-operative movement.

The Minister will, I know, be aware of the useful role played by housing co-operatives in many countries in meeting the needs of urban populations facilitating the proper management of apartments, flats and tenant participation in sharing responsibility for maintenance and so on. I must say I think it is a pity that this country is so far deprived of a major impact of this benefit. This is clearly because there is a lack of a suitable financing system to fund housing co-operatives as legal entities. There is no system at all for funding co-operatives, rental or co-ownership housing.

I mentioned that other countries have these provisions, so there are state housing finance agencies which specifically assist housing co-operatives with capital mortgages payable to them as legal entities, in other words, as registered societies or as companies. In addition, grant or subsidy schemes have been devised to assist tenant members without going for occupancy charges. Alternatively, the state arranges to provide guarantees so that the housing co-operatives can borrow from the private commercial mortgage institutions. What that means basically is that the local authority or central funding guarantee loans, or mortgages, or interest free payments and then the housing co-operatives can go out into the active independent financial markets and acquire the funding at that point.

In Britain there is a specific organisation, the National Housing Corporation, which has been established for this purpose and I hope the Minister will consider instituting some such body here. At the moment all that can happen if the housing co-operative is established is that the individual members can go to mortgage companies or building societies, and so on. The difficulty with that approach, as the Minister I am sure is aware, is that if one individual member defaults, that can cause difficulty to the entire scheme. It is much more satisfactory to have the entire thing centrally funded.

Examples exist in Sweden, Germany and Norway as well as in Great Britain where there is direct state agency financing. In Denmark, a system of state guaranteed borrowing by co-operative housing associations combined with local authority grants has actually succeeded in producing 300,000 successfully managed rental dwellings. A specific amendment of housing legislation in Canada in the early seventies led to the building of over 30,000 dwellings by housing co-operatives with the assistance of the Canadian Mortgage Corporation.

There are several examples which we could profit from. Dublin Corporation, for example, in this the Millennium Year are not going to build any houses and I am not suggesting that this is a dereliction of duty on the part of the corporation because I understand the pressure on the housing lists is not what it was some years ago. The city manager Mr. Feely, and I am not talking out of school when I say this — certainly put it on record on "Questions and Answers" on RTE television a few weeks ago that these authorities vested with responsibility for looking after the housing requirements of this great capital city all feel that one of the principal lacks in the revitalisation of Dublin is attracting private building investment. If the big financial houses and big building speculators are not prepared to do it, would it not be much more in the traditions of our country that the co-operative movement should be encouraged to make up this gap? I hope the Minister will take this very much on board.

It is true that every country has its own traditions and aspirations with regard to housing. It is not surprising that Senator Fallon should be able to talk about how choosy people in the Athlone area are about their housing. They are equally choosy in Dublin. We have a sturdy independence of mind in this country about housing and a very high proportion of people actually wish to own their own houses. I welcome that although I suppose some of the more capricious aspects of it may be deplored.

There is a need to widen the range of housing options in Dublin in order to overcome the loss of the private rental sector and to provide a means whereby those who want to live in the city can be involved in providing their own housing through co-operation. I have no doubt that there is a need and there is a market there. I will tell the Minister a story which I think is illustrative and I am afraid I will be very parochial. It comes, you will not be surprised to learn, from North Great George's Street where we decided to restore some buildings that were pulled down by the corporation some years ago in order to complete the streetscape. There was a need for particularly sensitive treatment and to accomplish this we established a housing co-operative. One small article, about three paragraphs long, in The Irish Times— it was not a big public relations job — triggered more than sufficient applicants to float the housing co-operative. That is very interesting. We did not have a press conference. We did not make a big song and dance about it. We had more than enough applicants to float this co-operative. However, difficulties of the kind that would be covered by an alteration in legislation and an encouragement by the Minister — I know he is a person of goodwill with regard to the inner city — would not have allowed this scheme to take off.

I will acknowledge my own shortcomings and the shortcomings of the people I work with. Employing a sophisticated financial package which is necessary in order to get a housing co-operative really working, drawing down funds on a phased basis so that you can say to the members of the co-operative: "You pay £1,000 on 2 February, you will then pay another £15,000 on 16 June and you will get the deeds on 3 September" and arranging all these things with the builder and so on, is a sophisticated operation and needs guidance. We will get a certain amount from the housing co-operative, NABCo, but we lack the capacity to trigger really supportive finance. It is very important that this matter should be addressed and I believe the Government have shown themselves to be sufficiently imaginative to take this kind of suggestion on board. At the moment all NABCo can do is to provide advice, guidance and experience. They can provide model rules for housing co-operatives but they are effectively, although I do not believe intentionally, neutured. They are so constrained that they cannot provide the vital assistance that is absolutely necessary.

I have been informed at the highest levels that the absence of access to suitable funding agencies for housing co-operatives as legal entities is the single principal obstacle to the development of the co-operative housing movement in Ireland. If the Minister was able to indicate, even at some time in the future — because I know it is unfair to bounce these things straight into the Minister's lap in the middle of a debate on the Bill — that these ideas would be seriously looked at, I believe that would be an encouragement and the work of NABCo would be sustained and fostered. I hope also that the Minister — this is my last remark; there are other people who wish to come in and I do not want to be greedy with the time — this is slightly outside the scope of the Bill but I am appealing to the——

Mr. Doyle

I recognise that.

Mr. Norris

What I have said so far is very marginally——

Mr. Doyle

You have gone outside the scope of the Bill.

An Leas-Chathaoirleach

The Senator might be allowed to continue.

Mr. Norris

That frightful calumny on the Leas-Chathaoirleach who, if it had been outside the scope of the Bill, would have restrained me should not have been allowed. I hope that the Minister will also investigate the possibility of encouraging the development of flying freeholds within the inner city which means that people can actually get access to mortgages not for entire buildings but floor by floor by floor which would provide access for people on modest incomes to acquire dilapidated housing stock in the inner city which could thereby be renewed. If I have transgressed and gone outside the provisions of the Bill I cannot really say I regret it because I know the Minister is somebody who is interested in ideas. Even if I have been slightly guilty in this area I hope he will at least give some courteous consideration to what I have had to say. I would also like to say that I welcome the Minister's legislation.

Mr. McGowan

I would like to comment briefly on this Bill because I think it is very important to recognise the amendment which is being proposed in this Bill and also to welcome the measure generally. Coming from a county in which there is a housing problem, I recognise the tremendous help that the National Building Agency has been to those who do not qualify for a local authority loan or qualify for a local authority house. Initially, people were slow to accept that the National Housing Finance Agency had a role to play. I am glad to see that it has been necessary to apply for a doubling of the capital involved from £500 million to £1,000 million. That in itself indicates that the scheme has been successful. Even though this increase in capital is being provided for the Housing Finance Agency I suggest that it is also important for the Minister to look at other aspects of the programme and I think now would be an opportune time.

Let me give an example of the difficulties that a local authority member encounters. Say somebody qualifies for a Housing Finance Agency loan and fills up the application form. He is given an option on the repayments and he has to state that the repayments are based on his income. These can be calculated provided he furnishes returns at the end of the year. If, for any reason, there is a delay in the furnishing of those returns, which was part of the agreement, the Housing Finance Agency will then charge a penalty premium. That is wrong. Another method and another mechanism should be found. In some cases the applicant finds himself in some difficulties. For a well organised person who has no financial difficulties or a person who has a nice steady income and does his sums at the end of the month, it is great but not so for somebody living on a farm who has to sell a few sheep, or cattle, or a ton of potatoes to pay for it. The potatoes might not mature on time and that very often is dependent on the weather and many other side issues. I ask the Minister here in the Seanad today to look at that aspect of the matter and to take a look at the regulations.

The Housing Finance Agency have done tremendous work. They have filled a gap in that many people who found themselves just above the income limit to qualify for a local authority loan were rescued, assisted and helped by funds from the agency. We have come to value the input and the contribution that they have made. I further suggest that the Minister might consider this a good time for the directors of the Housing Finance Agency and the members of the local authority to meet and take a look at how successfully the scheme is working. The Minister, who has a background of active involvement in local authorities, must accept and appreciate that we learn from experience and gain some knowledge as we go along. Members of local authorities have a contribution to make and I humbly suggest to the Minister at this stage that he arrange for the directors of the agency to meet members of the local authority, be it at general purpose committee meetings or at council meetings, or to meet delegations from local authorities. I think this could prove fruitful as it would give both sides an opportunity of looking at how the scheme is progressing. Now is the opportune time to do that and I hope my suggestion merits a response.

Another question I would like to put to the Minister at this stage is what would happen where a county finds itself not receiving a share of the £100 million now being allocated to the Housing Finance Agency? Do the city of Dublin and the major centres such as Cork, Waterford, Galway and Limerick have more people qualified to absorb the large part of the £100 million and to what extent do rural areas benefit from the £100 million which is being provided for the National Finance Agency? This is a very important question which many a rural representative must ask. In Donegal, even though our allocation for housing is quite good, we find ourselves in continuous difficulty. Many small rural dwellers live in poor housing and we have an ongoing programme to provide housing for many of these. While we have been fairly successful, there is still a backlog and we would look forward to receiving help from the National Building Finance Agency.

I do not think that the National Building Agency have done the work we would have expected them to do. They have abandoned, certainly, my county and have almost abandoned the west generally. They are looking at where it would be profitable for them to build in the future and where houses can be sold at a high price. The National Building Agency, and I would like to put it on record, are doing nothing to house people in my county. Therefore, the gap will become that much wider. It will add to the difficulties and fears I am expressing if in fact the £100 million capital provision for the Housing Finance Agency is taken up by the major centres of population. Added to that, if the National Building Agency find it very attractive to build in those same areas, the provision of houses in rural areas will become a major problem for local authorities.

I would like to say at this stage that the provision of housing is one of the major problems that the country has to face up to and, unforunately, too many people at the moment depend on local authority housing. I can never understand why there never has been a review of our approach to the provision of housing. The local authority housing programme is one that is nearly impossible to finance. I say this because the average cost of a house, one having bought and developed the site, even where the cost of the site was reasonably inexpensive, is about £30,000.

The tenants who qualify quickest are those with large families and those with very low incomes. We have found that at the end of the day the average rent of £10 per week does not cover the cost of maintenance. In fact, there is never a return on the capital which would allow an extension of the programme to provide more houses for those who are on the waiting list. It is time that that area was looked at and I take this opportunity to say to the Minister that one area that merits a reappraisal is the provision of funds for housing, regardless of the heading it comes under.

People take things for granted, they walk into a new house and will not carry out even minor repairs. It is not unusual to get a call to come out to see where drains are blocked at the back of a house. A person may only have been given a new house, yet he will expect the local authority to send out an engineer, two or three men with diggers, equipment and new pipes. This is something he would not do if he knew where the capital came from in the first instance and fully appreciated how lucky he was to be given a house at a rent that would not even pay for its maintenance. Tenants in local authority housing have got to be made aware of this.

You can preach to people that they should be getting new houses to the extent where you can convince them that they are being victimised. One of the duties of the Government which is very important at present, through the Department of the Environment, is the provision of housing. The time has come when people who walk into a new house worth £30,000 must understand that the provision of housing is capital intensive and that this capital does not grow on bushes. I strongly advocate to the Minister that the local authorities should not maintain housing. I have some years of experience in this matter and I come from a county where there are many people in need of local authority housing. I would like to see local authorities facing up to the reality of taking a practical and honest approach because if they do not do so no funds will be available to house those on the waiting list.

The Minister has the major responsibility in this area and, hopefully, this increase in capital for the Housing Finance Agency will set us on the road. It is a help in one area but we have to look at the provision of houses, especially in rural areas, because the dice is loaded against rural counties where the housing agency may not have a big number of applicants. The Minister should inform the House if possible — if the computer works — of the figures. I would like to know how many loans of the total allocation of £500 million have gone to rural Ireland. It is important that we get that figure because it has a bearing on the overall picture of financing of local authorities and the housing programme.

I welcome this Bill and the extra provision for the HFA but I strongly urge the Minister to look at the overall housing programme. It needs to be looked at and people need to be told that it takes finance to build houses. I strongly urge the Minister to look at this. I hope that any agreement for the letting or buying of houses or rent-purchase schemes will exclude maintenance because finance is being wasted on small, petty maintenance work. Engineers are being sent out to inspect such small jobs. That is a waste of money and it does not encourage those who are appointed tenants of local authority houses to appreciate their new houses. I should like to compliment the directors of the Housing Finance Agency and I hope the Minister will accept my recommendation that regular meetings be held in every county and that up-to-date information be given at them.

Mr. McMahon

I welcome the Bill but I am somewhat puzzled as to why this extra finance is required today when there has been a reduction in the number of applications for loans to the Housing Finance Agency. That has been the experience in my local authority area. I wonder how this fits in with the Government's policy of encouraging people to borrow from banks and building societies. Indeed, the Government have been doing what they can to encourage those financial institutions to facilitate applicants. I am sure the Minister will tell us in his reply. The Housing Finance Agency has achieved in our time something which I am sure no Senator thought possible in his wildest dreams, a massive reduction in the housing lists of local authorities. One would not think this had happened listening to Senator McGowan, but I am not familiar with the position in his part of the country. In the Dublin area and, indeed, most of the country, housing lists have been reduced. There is a danger in regard to that but I am sure it is one the Minister will pay attention to. I will deal with that at a later stage.

Many teething problems were experienced by the Housing Finance Agency in the first four or five years of operation although it did a good job during those years. I should like to compliment a former Minister, Deputy John Boland, who paid a visit to this House. Deputy Boland went into this problem in detail. Indeed, when I worked with him on a local authority I found him to be extremely interested in housing. I would say, without fear of contradiction, that it was Deputy Boland's efforts that brought about the Housing Finance Agency. In the early years some people had difficulties with the agency and problems arose between borrowers and local authorities and local authorities and the Housing Finance Agency. They were swiftly rectified in the legislation which came into operation on 1 July 1986 under which the borrower was given three options, the annuity option which would be an SDA type of option; the income-related option and the convertible one after five years. That improvement meant that the Housing Finance Agency was here to stay and that it would play a major part in financing house purchases. Indeed, the agency has made finance available to thousands of people who, otherwise, would never have been in a position to buy their own houses. As a result thousands of people were taken off housing authorities' lists. In making those loans available the Housing Finance Agency ensured that many people did not have to approach local authorities for houses.

In the period from the start of the Housing Finance Agency up to 1 July 1986 when the three tier option was given to borrowers, upwards of 4,500 people in my local authority area availed of the agency's finance. Many of those people and, indeed, some since, ran into difficulties. They were not of the local authority's making or the fault of the Housing Finance Agency but arose from marital problems and other reasons. Those people have been unable to meet the repayments required. The Minister should pay some attention to this anomaly. I find more and more houses coming on the market from these people who simply walk out of the house, leave the key behind them, or go into the local authority and hand in the key with no requirement to do anything else. In the case of my own local authority housing officials have done everything possible to encourage people to stay on in those houses but for reasons such as emigration, marital breakdown and so on many of them are now being handed back. I have an example of what occurred in recent weeks. A Housing Finance Agency loan of £21,600 was granted to a couple on 13 July 1987. That house was sold last week for £18,500 which represents a considerable fall in the amount of money that was loaned on the house, not to speak of the price the house cost. On a house in Clondalkin a loan of £23,700 was approved on 10 August 1987 but only last week that house was sold for £21,000, a drop of £2,700 on the loan not to mention the price the house cost. In the case of a house in Mulhuddart a loan of £22,500 was approved and it was sold for £17,000. That loan was granted on 5 December 1984. A house in Tallaght on which a loan of £22,500 was advanced was sold for £15,500, a considerable drop I am sure the Minister will admit.

This is leaving this market wide open to speculators to move in and purchase these houses at cheap rates and to set them. Speculators were encouraged further in the tax concessions in yesterday's budget to purchase houses and set them. The Minister should have a serious look at this and make money available to local authorities to purchase those houses and re-let them to those on their housing lists. Many of those houses are coming on the market. I do not believe we should leave the market wide open for speculators to operate. I would like to see the Minister giving serious consideration to making money available through some agency to local authorities. Requests by local authorities to the Department for money to purchase these houses are not being granted, with the result that they go at a very cheap rate to somebody who is going to make a lot of money out of them.

I have another great fear with the scaling down of local authority activity in the provision of houses. There are people who until ten years ago had no hope of getting a house. I am speaking of the widower, the widow or the unmarried person advanced in age. In my early years on a local authority, when such people applied for a house they were put on a list in the hope that some day something would be done to house them. Something was done eventually. Such applicants may suffer and be left behind again because the emphasis will now be put on the loans provided by the Housing Finance Agency, the banks and the building societies. Many local authorities this year are not building houses. No provision is being made for the person living alone who cannot find sufficient money for a deposit to get a house under the Housing Finance Agency. Those people need a single-bedroom house and unless they are provided by private developers and qualify for a Housing Finance Agency loan they will have to go on the local authority housing list with no hope of ever being housed in their lifetime.

There is the person, married with a family, who does not wish to own his own house. Reference has been made to the fact that the great percentage of Irish people wish to own their own house and that is a good thing. I hope that percentage will increase but we cannot ignore the percentage, however small it may be, who do not wish to own their own houses. The Minister should ensure that local authority housing development is kept at some kind of a pace and that the categories I have referred are not being left behind because of the new method of helping people to own their own houses.

Miss Wallace

The Government's initiative in relation to the banks and building societies providing home loans to a greater number of people is to be welcomed. The suggestion that the Department of the Environment should be able to go back to the banks and building societies at intervals to discuss difficulties that may arise should be pursued. The type of people who will now be availing of loans from banks and building societies will be those in a modest income group. They are the people we should try to protect and I would like to see the Department continually monitoring the situation.

One question the Department might follow up in further discussions with the banks and building societies is the term of 20 years for repayment. That will probably be found unsatisfactory by many of the low income people compared to the 30-year term which would have been available to them from the county council. Perhaps the Department will consider approaching the banks and building societies and requesting a longer period such as 25 years or 30 years for repayment rather than 20 years. This is now one of the main differences between the two loans, the loans provided by the local authority and those provided by the building societies and the banks. There is a new approach to facilitate more people seeking home loans through the banks and building societies, many of them in the modest income group but many in that group would be better facilitated over a 30-year period rather than a 20-year period. I would like to think that the spirit in which the new arrangements were made would be carried through also. Many people have been critical of the bank and building society arrangements and there have been suggestions that money might not be handed out too easily by the banks and building societies. I have found that the opposite was the case and I have come across people who were readily facilitated by the banks and building societies. In some cases, and this causes me concern, people were facilitated who might have been better off going to a local authority because of their modest income. I hope they do not have problems in 15 or 20 years time with those loans. The banks and building societies should look at this and, perhaps, send more people back to the local authorities, those who may have difficulties in the years ahead.

Previous speakers dealt with the whole new approach to the provision of local authority houses. I understand that the income from rent is half the maintenance cost on local authority houses and, perhaps, the time has come for the State to sell those houses at attractive rates to the occupiers. At present under the tenant purchase scheme tenants are offered houses at a cost of £36,000 to £40,000 which is far beyond the reach of the occupier. Perhaps those houses could be sold to those people at more attractive rates particularly when the maintenance costs are so high.

Senators Hogan and Doyle referred to the old HFA loan and the objections to it at the time of its inception. I was never happy with that loan and my experience in County Meath, being a rural area, was that when prospective buyers found that it would have spelt disaster for them should they have to sell the house in four or five years time, they quickly changed their mind about considering the HFA loan as a possibility for their mortgage. I never recommended the HFA-type loan to people for this reason and I was always concerned about it. On the other hand, the SDA loan was one which we could all quite happily recommend and I am glad to see that people will be able to continue to avail of local authority loans if the banks and building societies are unable to assist them. The Bill before us broadens the powers of the Housing Finance Agency loan in advancing money to local authorities and that is to be welcomed.

Mr. McDonald

I should like to take this opportunity to welcome this Bill to the House and compliment the Minister on the work he has spearheaded in this regard. From a local authority point of view the new changes that were introduced certainly make a difference. Perhaps as we get used to the new modus operandi it will become easier but last year when the changes were introduced they certainly presented many people in the lower middle income group with problems in their efforts to secure finance. Nevertheless, the Department in their overall approach to housing are very progressive.

Senator McGowan, during the course of his contribution, referred to the problems some local authorities are experiencing as regards house repairs. All local authorities are in the same situation. The allocation under the housing heading has been reduced as a policy and I hope the Department, and the Minister, will look at tenancy agreements between local authorities and tenants and, perhaps, exclude the agreement by the local authority to carry out repairs, particularly the minor repairs. It would be very easy to exclude the disadvantaged categories of persons from this. Pensioners, disabled persons and people on special allowances, could be excluded.

It is infuriating for a local representative to have to take a certain amount of lip from very able bodied young tenants who have a lot of time on their hands but are not prepared to put a nail or a screw in a door handle. Irrespective of what party or what flag colleagues on the council represent, he or she would not be on a local authority unless they had a certain amount of public spirit and were determined in a particular way to assist in local administration. Therefore, one tends to develop an overall look of the common good. Members of different parties might see that from slightly different angles now and again but it is the desire of every member of a local authority to be able to assist constituents in their area to get the best possible service. We pride ourselves in trying to build up that public service for the common good but we often see an outright disregard and abuse of the system, especially with some of the younger tenants, those who do not really want to conform. Every local authority has a number of people who, perhaps, have not gone through the traditional ceremonies here and there. They are very demanding and I for one have to bite my tongue when dealing with people like that because they do not appreciate that they are getting a £26,000 or £27,000 house. They are not prepared to give any time towards its maintenance. We have in my county council difficulty funding the house repair scheme and this year at our estimates meeting we decided to privatise the service where it is costly. I hope the Department will look at that.

There was mention earlier of the role of the voluntary housing agencies that have approved status from the Department. They are a relatively new phenomenon in the public service. I should like to pay a tribute to Bill Licken, a senior official in the Minister's Department, who has done a tremendous lot to encourage community groups to provide for the disadvantaged in their own society. The Department I must say have done tremendous work in motivating those organisations, such as the Sue Ryder Foundation of Ireland with which I am involved, in providing retirement villages and homes which are community based. That is the kind of spirit I am glad to see the Department encouraging and supporting in such a wholehearted and substantial way.

I welcome the increase in the finance for housing and I am glad that the Department from time to time look at the facilities that are available. In the larger towns it might be desirable if we went for apartment type accommodation as a sort of stop gap approach to serve young families for a few years. Looking at the housing stock we have in our counties, even rented accommodation, I do not think it is utilised to the full. We can have a single person living in a three or a four-bedroomed house. I am not suggesting that that should be taken back but we have not got to the stage where we can give people a choice. From my experience the most deserving people, especially the elderly and the pensioners, give councils very little bother or abuse. They are almost apologetic about seeking improvements they need for their own comfort. I support this measure which is a new departure and I hope it will prove as successful as the Minister envisages. If not we can always seek a debate with him later.

An Cathaoirleach

There are only three minutes left for this debate and I understand that the Minister of State, Deputy Connolly, wants to make a detailed reply to every Senator's contribution. Will the House agree to the adjournment of this debate until a later date when the Minister can reply? I am sure that is what the Minister would like.

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

With the consent of Senators, I would be grateful if the House could see its way to conclude the debate on the Bill next week.

Debate adjourned.