Thursday, 4 March 2004

Questions (90)

Trevor Sargent

Question:

85 Mr. Sargent asked the Minister for Finance the plans he has to introduce a scheme whereby local authority tenants can claim tax relief on rent they are paying when such tenants are paying rents to the equivalent of a mortgage; and if he will make a statement on this proposal which was approved by a vote of Fingal County Council on 10 November 2003. [7308/04]

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Written answers (Question to Minister for Finance)

As I mentioned in my reply to the same question on 10 December 2003, responsibility for rent schemes was devolved to local authorities in August 1986. The principles governing rent schemes are as follows: the rent payable should be related to income and a smaller proportion of income should be required from low income households; allowances should be made for dependent children including those under 21 years of age in full-time education; a contribution towards rent should be required from subsidiary earners in the household; provision should be included for the acceptance of a lower rent than that required under the terms of the scheme in exceptional cases where payment of the normal rent would give rise to hardship; and appropriate local factors should be taken into account including the costs of the maintenance and management of the stock of rented dwellings and the adequacy of the rental income to meet such costs.

Within the broad principles outlined above, authorities have discretion as to the types of income to be taken into account in the assessment of rents and how to deal with hardship cases, poverty traps and anomalies that arise in individual cases. By definition, local authority rents should reflect ability to pay. They bear no relation to economic rents in the private sector. Based on the most recent returns from local authorities the average weekly rent in 2002 was €29.62 per week.

It is clear that local authority rents are heavily subsidised at present. It would not be appropriate to provide subsidised housing to a person and then offer a further subsidy through the tax system. At present I have no plans to introduce a scheme whereby tenants renting local authority houses can claim tax relief on rent paid.

I have received no correspondence from Fingal County Council in respect of the motion referred to by the Deputy.