Housing Finance Agency (Amendment) Bill, 1987: Committee and Final Stages.

Sections 1 and 2 agreed to.
Question proposed: "That section 3 stand part of the Bill."

I am delighted that the banks and the building societies have taken an interest in supplying funds for house purchasers. But, as Senator Fallon said last week in the House, banks are now looking for business. We all know the detrimental effect this had on the farming community in the seventies when the banks had a lot of money available and people invested in farms and were not able to meet their commitments. I am afraid that could also happen in the housing sector and that people who make applications to the banks would be well received and given loans which may be beyond the ability of some to repay.

The fact that the Minister said that the banks can clear people within 48 hours worries me because, even though local authorities might have been slow, they were always very prudent and there is a value in that. Therefore, I would like the Minister to comment on how banks are giving loans to people and on ability to pay in future, because problems could arise and interest rates might not stay as they are at present. I hope they will decrease further. Nevertheless we have to take into account international events which have a bearing on interest rates in this country.

Thank you, Senator. So far I am pleased with the contribution the banks and the building societies have made. The banks now take into consideration the person's ability to pay. The beauty of the banks and the building societies over the local authorities is that, if a person is earning over £10,000 gross per annum, there is no problem in getting a loan. From dealing with my constituents with regard to the banks and the building societies I can say that they are very prudent as to people's ability to pay and they will always point out a problem to the borrower and also ensure that the person who takes out this commitment will be able to meet the repayments. It is essential now — and most companies and financial institutions insist on this — that a mortgage protection policy be taken out to cover the sum borrowed because, if the borrower dies, the survivor, who may be the wife, or the son, or the daughter, automatically owns the property because the mortgage protection policy covers that.

I am grateful to the Senator for raising that point. People today do not want to be left a long time wondering if they will or will not be approved for a loan. All in all, I am satisfied now that this is operating satisfactorily. If there are any other complaints I shall be glad to take them up with the financial institutions.

There is one remark which I would like to make in relation to the £5,000 grant. The Minister said he was anxious to improve the housing situation. I feel the time has come to abolish the £5,000 grant for people who are living in local authority houses. I ask the Minister to consider at some stage providing that £5,000 grant for people who live in local authority flats to allow them to enter private housing. Often people living in flats have not got the points necessary to get local authority housing in Dublin. The flats could then be left for homeless people and single people. This would be an opportunity to turn round the housing stock to house smaller units in flats and allow larger families to enter into housing.

I appreciate the Senator's remarks. The £5,000 grant served its purpose. In some estates throughout the country it was creating some problems where people were leaving estates, the estates were becoming run down because of a reluctance on the part of tenants to go to live in the estates — for what reason I do not know. Then there was an unprecedented delay in reallocating housing to those in need. I agree that there would be a problem in the Dublin area in regard to the re-allocation of houses but, in some cases, it was taking up to 12 weeks to re-allocate a house. That was leaving these houses open to vandalism and so on.

When I came into the Department the total amount due in applications and the amount needed in March of last year to cover the grants, including house improvement grants, was approximately £235 million. That has to come from the taxpayer. Applications in the house improvement grant area are still coming in at a very high rate. The grant has served its purpose. When these schemes are completed we can reconsider the position and see what is best to do then.

Question put and agreed to.
Sections 4 and 5 agreed to.
Title agreed to.
Bill reported without amendment and received for final consideration.
Question proposed: "That the Bill do now pass."

I would like to thank you, a Chathaoirligh, and the Leas-Chathaoirleach and Members for their co-operation with me on this Bill.

Question put and agreed to.