Written Replies Nos. 88 to 102
88. Deputy Niall Collins asked the Minister for Finance the steps he will take to deal with the high cost of insurance for businesses as evidenced by the 2016 National Competitiveness Council's cost of businesses report and for individuals across many sectors; and if he will make a statement on the matter. [17892/16]
View answerAs Minister for Finance, I am concerned that there should be a stable insurance sector and that the risk to policyholders and to the wider financial system are limited. An adequately-reserved, cost-competitive insurance sector is a vital component of economic activity and financial stability.
The current high cost of insurance is a concern for the Government. While the provision and pricing of insurance policies is a commercial matter for insurance companies, this does not preclude the Government from introducing measures that may, in the longer term, lead to a better claims environment. This is a complex matter to address and it involves a number of Government Departments, State Bodies and private sector organisations. I have established a task force in my Department to undertake a Review of Policy in the Insurance Sector.
The first phase of the work of the task force is a Review of the Framework for Motor Insurance Compensation. This is being carried out jointly with the Department of Transport, Tourism and Sport. My colleague the Minister for Transport, Tourism and Sport and I expect to receive this first report shortly.
Separately, the broader work of the task force includes an examination of the factors underlying the recent increases in the cost of motor insurance but also including other aspects of insurance policy such as the availability of insurance at reasonable cost to particular businesses and sectors of the community which are reported to be having problems in this regard.
This work of the task force is being undertaken in consultation with the Central Bank of Ireland, other Government Departments, Agencies and interested bodies. The aim of the review is to recommend measures to improve the functioning and regulation of the insurance sector in Ireland, identifying the issues that can be addressed on a more immediate basis and those that need more long-term policy implementation. This work will be completed over the coming months.
89. Deputy Stephen S. Donnelly asked the Minister for Finance if he will put in place a moratorium on repossessions of principal dwelling homes until the measures contained in A Programme for a Partnership Government have been implemented; and if he will make a statement on the matter. [17746/16]
View answerThe Government attaches great importance to addressing the issue of mortgage arrears and wants to keep families in their homes and avoid repossessions insofar as possible. In this context, it is important to note that there are a number of protections already in place to protect borrowers in arrears. In particular, the Code of Conduct on Mortgage Arrears (CCMA) sets out how mortgage lenders must treat borrowers in or facing mortgage arrears, with due regard to the fact that each case of mortgage arrears is unique and needs to be considered on its own merits.
The CCMA is a statutory code issued under Section 117 of the Central Bank Act, 1989. The CCMA applies to all regulated mortgage lenders operating in the State when dealing with borrowers facing or in mortgage arrears on their primary residence, including any mortgage lending activities outsourced by these lenders. Lenders are required to comply with all aspects of the CCMA and non-compliance with the CCMA is enforceable against regulated entities by the Central Bank.
When it was introduced initially the CCMA contained a six month (later extended to 12 months) moratorium for co-operating borrowers whose mortgage was in arrears (or pre-arrears). This was revised in 2013 and replaced with a requirement that a lender is required to wait at least eight months from the date the arrears arose, before legal action can commence against a co-operating borrower. Separately, regardless of how long it takes the lender to assess a case, and provided that the borrower is co-operating, the lender must give three months' notice to the borrower before they can commence legal proceedings where the lender does not offer an alternative repayment arrangement or the borrower does not accept an alternative repayment arrangement offered by the lender. This gives co-operating borrowers time to consider other options such as a Personal Insolvency Arrangement.
The combined effect of these two protections (an eight month protection period and a requirement for three months' notice) is that, for a co-operating borrower, legal proceedings may not commence until three months from the date the letter (setting out one of the above positions) is issued or eight months from the date the arrears arose, whichever date is later. It is important to also note that the commencement of the court process is not a signal that a repossession will occur it may often be the case that the process then prompts borrowers to re-engage with their bank and to find a solution. Often these cases are adjourned to allow both parties time to find a sustainable solution.
It should also be noted that in a repossession case before the Courts a borrower's rights are not confined to the provisions of the CCMA. The 2013 Land and Conveyancing Law Reform Act has provided a new statutory avenue to borrowers in a repossession case involving a primary dwelling to seek an adjournment of the repossession case to allow the borrower the opportunity to consider and, if so decided, to propose a Personal Insolvency Arrangement (PIA) to creditors in order to resolve an unsustainable debt position. If this is approved by the Court, the debtor would then be in a position to formally propose an alternative and sustainable payment arrangement irrespective of whether or not the primary home lender considered or rejected such an arrangement under the CCMA. Also, under a PIA there is an onus on the personal insolvency practitioner to, insofar as is reasonably practicable, formulate a proposal on terms that will not require the debtor to dispose of an interest in, or cease to occupy, a private principal residence. Even if such a PIA proposal is rejected by creditors, the Personal Insolvency Act has now been amended to provide that the proposal can then be submitted to a Court for adjudication.
The numbers in mortgage arrears have been steadily declining. Data released by the Central Bank on 10 June show that to end-Q1 2016, the number of mortgage accounts in arrears for principal dwelling houses (PDH) has declined for the last eleven quarters. Some 120,447 PDH accounts were also classified as restructured. It is clear that where a borrower actively engages with their lender with a view to agreeing a sustainable arrangement to address their mortgage arrears, it is more likely that an equitable arrangement will be found and that borrower will be able to remain in their family home. Consequently, I would urge borrowers in this situation to contact the Money Advice and Budgeting Service (MABS) who are in a position to provide free and confidential support to borrowers.
90. Deputy Stephen S. Donnelly asked the Minister for Finance if he will consider a higher rate of tax on excessive profits made by vulture funds, for example, where margins are greater than 50%; and if he will make a statement on the matter. [17747/16]
View answerThe rates of corporation tax in Ireland are 12.5% for active trading income and 25% for other income. This is long standing settled policy and the cornerstone of our tax system. I do not have any plans to amend Ireland's corporation tax rates or introduce specific higher rates.
I understand that a number of the funds referred to would be 'qualifying companies' within the meaning of section 110 Taxes Consolidation Act 1997. As such the profits of the qualifying company are chargeable to tax at 25% (under Schedule D, Case III) but are computed by reference to the rules applicable to trading companies (i.e. in accordance with the provisions of Schedule D, Case I).
On so-called "vulture funds" more generally, the Consumer Protection (Regulation of Credit Servicing Firms) Act, 2015 was enacted on 8 July 2015. It was introduced to fill the consumer protection gap where loans were sold by the original lender to an unregulated firm. The 2015 Act introduced a regulatory regime for a new type of entity called a 'credit servicing firm'. Credit Servicing Firms are now subject to the provisions of Irish financial services law that apply to 'regulated financial service providers'. This ensures that relevant borrowers, whose loans are sold to third parties, maintain the same regulatory protections they had prior to the sale, including under the various statutory codes (such as the Consumer Protection Code, Code of Conduct on Mortgage Arrears, Code of Conduct for Business Lending to Small and Medium Enterprises and the Minimum Competency Code) issued by the Central Bank of Ireland and the Central Bank (Supervision and Enforcement) Act 2013 (Section 48) (Lending to Small and Medium-Sized Enterprises) Regulations 2015 which comes into operation on 1 July 2016.
91. Deputy Michael McGrath asked the Minister for Finance his plans to review the eligibility criteria for a person to qualify for a primary medical certificate under the disabled drivers and disabled passengers (tax concession) scheme, 1994; if the medical board of appeal has any discretion regarding the application of the rules; why a person without an arm and with limited use of the other arm does not qualify under the scheme; and if he will make a statement on the matter. [17636/16]
View answerThe Disabled Drivers and Disabled Passengers (Tax Concessions) Scheme provides relief from VAT and VRT (up to a certain limit) on the purchase of an adapted car for transport of a person with specific severe and permanent physical disabilities, payment of a fuel grant, and an exemption from Motor Tax.
To qualify for the Scheme an applicant must be in possession of a Primary Medical Certificate. To qualify for a Primary Medical Certificate, an applicant must be permanently and severely disabled within the terms of the Disabled Drivers and Disabled Passengers (Tax Concessions) Regulations 1994 and satisfy one of the following conditions:
- be wholly or almost wholly without the use of both legs
- be wholly without the use of one leg and almost wholly without the use of the other leg such that the applicant is severely restricted as to movement of the lower limbs;
- be without both hands or without both arms;
- be without one or both legs;
- be wholly or almost wholly without the use of both hands or arms and wholly or almost wholly without the use of one leg;
- have the medical condition of dwarfism and have serious difficulties of movement of the lower limbs.
The Senior Medical Officer for the relevant local Health Service Executive administrative area makes a professional clinical determination as to whether an individual applicant satisfies the medical criteria. A successful applicant is provided with a Primary Medical Certificate, which is required under the Regulations to claim the reliefs provided for in the Scheme. An unsuccessful applicant can appeal the decision of the Senior Medical Officer to the Disabled Drivers Medical Board of Appeal, which makes a new clinical determination in respect of the individual. The Regulations mandate that the Medical Board of Appeal is independent in the exercise of its functions to ensure the integrity of its clinical determinations. The Medical Board of Appeal's clinical determination is limited to the scope of the six qualifying criteria, and the Board does not have discretion in relation to the application of these criteria. The criteria to qualify for the Scheme are necessarily precise and specific. After six months a citizen can reapply if there is a deterioration in their condition.
The Scheme represents a significant tax expenditure. Between the Vehicle Registration Tax and VAT foregone, and the repayment of excise on fuel used by members of the Scheme, the Scheme represented a cost of €50.3 million to the Exchequer in 2015, an increase from €48.6 million in 2014. These figures do not include the revenue foregone to the Local Government Fund in the respect of the relief from Motor Tax provided to members of the Scheme.
I recognise the important role that the Scheme plays in expanding the mobility of citizens with disabilities. I have managed to maintain the relief at current levels throughout the crisis despite the requirement for significant fiscal consolidation. From time to time I receive representations from individuals who feel they would benefit from the Scheme but do not qualify under the six criteria. While I have sympathy for these cases, given the scale and scope of the Scheme, I have no plans to expand the medical criteria beyond the six currently provided for in the Disabled Drivers and Disabled Passengers (Tax Concessions) Regulations 1994.
92. Deputy Michael Healy-Rae asked the Minister for Finance his views on correspondence (details supplied) regarding the 9% VAT rate; and if he will make a statement on the matter. [17653/16]
View answerThe 9% reduced VAT rate for tourism related services was introduced in July 2011 as part of the Government Jobs Initiative. The measure was designed to boost tourism and create additional jobs in that sector. The Programme for a Partnership Government published in May, includes a commitment to retain the hugely successful 9% VAT rate on tourism related services, providing that prices remain competitive.
93. Deputy Jackie Cahill asked the Minister for Finance the number of staff employed by the Revenue Commissioners in Nenagh, County Tipperary, in each of the years from 2011 to 2015, inclusive, indicating the highest and lowest numbers each year for the same period; and if he will make a statement on the matter. [17667/16]
View answerThe deployment of Revenue staff is a matter for the Revenue Commissioners. Revenue reviews its business and staff resource requirements in all locations on an on-going basis as part of its workforce planning. This is an iterative process that looks to identify and address critical posts that may require to be filled in the future.
As I previously advised the Deputy in my reply to Parliamentary Question No. 84 of 15th June the range of duties and responsibilities carried out in the Nenagh office have undergone some changes in the last six months. Revenue has indicated that one of the purposes of the changes is to increase the range of job types to increase the opportunities for overall staff development across the range of tax and customs duties.
I am advised by Revenue that 282 staff are currently serving in its Nenagh office. These 282 staff equate to 255 Whole Time Equivalents (WTE) which represent 4.35% of Revenues overall WTE count. Staff numbers in the Nenagh Office for the years 2011 to 2015 were as follows:
|
Nenagh Office - Revenue |
2011 |
2012 |
2013 |
2014 |
2015 |
|
Serving staff at year end |
290.00 |
279.00 |
281.00 |
278.00 |
283.00 |
|
Highest WTE |
261.81 |
261.64 |
255.26 |
253.02 |
259.39 |
|
Lowest WTE |
256.45 |
250.63 |
250.63 |
248.62 |
246.72 |
|
WTE at year end |
261.84 |
250.63 |
252.45 |
250.36 |
257.20 |
|
WTE as % of Revenue WTE |
4.39 |
4.37 |
4.39 |
4.43 |
4.45 |
I am further advised that overall staff numbers in Revenue have fallen from 6,076 in 2011 to a current WTE of 5,857. Reductions in staff levels have impacted across all locations in Revenue, including Nenagh.
The overall numbers in any Revenue location are subject to on-going fluctuations due to retirements, promotions and transfers. I am informed that there are currently no significant levels of vacancies in Nenagh other then those that arise in the normal way.
94. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which the lending institutions are proceeding on foot of instructions from the Central Bank in the matter of repossession of family homes or buy-to-let properties, the consequences of which will greatly exacerbate the housing problem, thereby illustrating a critical infrastructural weakness in respect of which a specific response might be required; if it is expected that such a response can issue in the short term; and if he will make a statement on the matter. [17758/16]
View answer96. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which the Central Bank can encourage the lending institutions to forego repossessions of family homes or buy-to-let properties with particular reference to the need to accommodate borrowers who continue to make every effort to make regular payments; and if he will make a statement on the matter. [17760/16]
View answer97. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which the Central Bank is likely to encourage lending agencies to forego repossessions and accommodate borrowers who continue to make regular and maximum affordable repayments, having particular regard to the fact that the lending institutions were themselves the beneficiaries of an ongoing facility by way of bailout; if it is expected that such considerations might be evaluated in the shortest possible time; and if he will make a statement on the matter. [17761/16]
View answerI propose to take Questions Nos. 94, 96 and 97 together.
The Deputy will be aware that regulated lenders are required under the Code of Conduct on Mortgage Arrears (CCMA) to have in place a Mortgage Arrears Resolution Process as a framework for handling cases in mortgage arrears or at risk of falling into arrears. Under MARP, a lender must examine each case on its individual merits and it must base its assessment on the full circumstances of the borrower, including:
- the personal circumstances of the borrower;
- the overall indebtedness of the borrower;
- the information provided in the standard financial statement;
- the borrower's current repayment capacity; and
- the borrower's previous repayment history.
The Central Bank established mortgage arrears resolution targets (MART) in 2013 for six Irish mortgage credit institutions (ACC Bank plc, Allied Irish Bank plc, The Governor and Company of the Bank of Ireland, KBC Bank Ireland plc, Permanent Tsb plc and Ulster Bank Ireland Limited) with respect to their Republic of Ireland principal dwelling home primary residence (PDH), and buy-to-let (BTL) mortgagees. All financial institutions subject to MART were required to report progress to the Central Bank regarding their achievement of MART targets, including the concluded sustainable solutions target. At end Q4-2014, the Central Bank reported that lending institutions had met the Central Bank requirements in respect of concluded sustainable solutions.
The Deputy should also be aware that the Central Bank published internal sustainability guidelines in 2013, updated in 2014, to guide supervisors in assessing if the modifications provided by lenders are sustainable solutions for mortgage arrears cases.
In April 2015 the Central Bank determined that relying on common quarterly resolution targets across all banks was no longer appropriate and wrote to each institution setting out new requirements that:
- concluded sustainable solutions are in place for the vast majority of distressed borrowers by the end of 2015;
- they meet the target of 75 per cent of concluded solutions to the end of 2015 and beyond;
- they continue to comply with the Code of Conduct on Mortgage Arrears;
- where they take legal action that may result in loss of ownership for a borrower, they should be prepared to re-engage with the borrower and explore alternative solutions if the borrower re-engages; and
- they engage fully and appropriately in the process set out in the Personal Insolvency Act, 2012.
I am informed by the Central Bank that it has always focused on providing a fair and consistent process for the borrower through the CCMA, the Consumer Protection Code 2012, the MART audits and against defined Sustainability Guidelines.
As the Deputy is aware, the CCMA has already been reviewed and updated over time and the Government will work with the Central Bank to ensure that the Code continues to be relevant, fair and balanced in respect of the legitimate interests of debtors and creditors, all the while promoting the availability of sustainable solutions to address genuine mortgage difficulty.
95. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he can address the situation arising from potential large-scale repossession of family homes, directly or indirectly, through the repossession of buy-to-let properties; and if he will make a statement on the matter. [17759/16]
View answerThe Government attaches great importance to addressing the issue of mortgage arrears. The recently published Central Bank Residential mortgage arrears and repossessions statistical bulletin to the end of the first quarter of 2016 reports that BTL mortgage accounts in arrears for more than 90 days decreased by 3.5 per cent during the quarter and BTL accounts in arrears for more than 720 days declined by 0.9 per cent, marking six consecutive quarterly declines in this cohort of accounts.
The Deputy will also be aware that Landlord-tenant relations are governed by multiple pieces of legislation (mainly under the aegis of my colleague, the Minister for Housing, Planning and Local Government) and the landlord/owner of the property is restricted in what they can do in relation to removal of tenants from a property. A tenant who is looking for information on their rights or who is unhappy with the way they have been dealt with in relation to the repossession of a property should contact the Residential Tenancies Board (RTB).
A total of 27,222 BTL mortgages have been restructured up to end March 2016, which shows that where a borrower actively engages with their lender with a view to agreeing a sustainable repayment arrangement to address their mortgage arrears it is more likely that an equitable arrangement will be found, thus avoiding repossession of the property. I would, therefore, strongly urge all distressed borrowers who have not engaged with their lender for some time, to contact the Money Advice and Budgeting Service (MABS) helpline for confidential and independent expert advice or alternatively, borrowers should contact the arrears support unit of their lender directly.
98. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which budgetary projections remain on target for the balance of the current year; the extent to which he expects any adjustments to be required in 2017; and if he will make a statement on the matter. [17762/16]
View answerThe Summer Economic Statement (SES) was published earlier this week and is currently being debated in the Oireachtas. The fiscal forecast contained in the SES has been updated for a number of budgetary developments. Since publication of the 2016 Stability Programme Update, the allocation for voted expenditure has increased by €540 million. This allows for an expenditure increase in the areas of Health, which is receiving €500 millon, and Justice, which has been allocated a further €40 million. Also in the interim, the tax revenue performance has been strong and at end-May 2016, receipts were up €774 million or 4.3 per cent above profile, which represents a 9.0 per cent (€1,549 million) increase when compared to same period in 2015. This solid performance was reviewed as part of the 2016 Summer Economic Statement and it was decided that the strong performance facilitates an increase of c. €900 million in this years tax forecast.
This more than offsets the increase in voted expenditure and helps to improve the estimate of the general government deficit for 2016 from 1.1% of GDP to 0.9% of GDP. However, I should point out that not all of the additional tax revenue received to date is of a recurring nature and therefore will not enter the tax base for 2017.
In terms of 2017, the SES estimates that fiscal space of €1 billion will be available and this has been allocated to expenditure increases and tax reductions, in the fiscal forecast, on a 2:1 basis. This is in line with the Programme for Partnership Government.
A further update to the forecasts for 2016 and 2017 will be contained in the Budget 2017 booklet using the most up to date macroeconomic and fiscal information available at that time.
99. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which any inflationary indicators have been detected in the economy which might require correction; and if he will make a statement on the matter. [17763/16]
View answerMy Department continues monitoring a wide range of indicators to assess inflationary pressures in the Irish economy.
Overall, inflation rates continue to be low. The most recent data published by the Central Statistics Office (CSO) on June 9th shows that inflation has been relatively muted over the past year. The the annual rate of inflation, as measured by their harmonized index of consumer prices (HICP) decreased by 0.2 per cent in May 2016 compared to the same month last year. This reflects a low monthly inflation rate, of 0.5 per cent, seasonally adjusted, between April and May 2016.
The low annual rate of inflation in Ireland, at -0.2 per cent, which is in line with that of the euro area, at -0.1 per cent, in the 12 months to May 2016, has been mainly driven by falling energy prices. However, annual HICP core inflation (excluding energy prices and unprocessed food) in Ireland increased slightly to 0.9 per cent in May, which is in line with that of the euro area at 0.8 per cent.
The Stability Programme Update published in April 2016 shows inflation increasing moderately over the year, with HICP inflation of 0.4 per cent forecast for 2016. This is broadly consistent with the rest of the EU.
100. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he remains satisfied that all economic indicators remain stable and consistent with requirements; and if he will make a statement on the matter. [17764/16]
View answerRecent indicators have generally been very positive, indicating the economic recovery is continuing in a sustainable manner. In the Stability Programme Update, published at the end of April, my Department forecast that the economy would grow by 4.9 per cent in 2016 and by 3.9 per cent in 2017. Furthermore, over the remainder of the forecast horizon out to 2021, growth rates are forecast to move towards its potential growth rate, estimated at around 31/2 per cent per annum.
Importantly, economic activity is now more balanced between domestic and external sources of growth. While the recovery in economic performance was initially led by the export sector, domestic demand is now making a strong contribution. This is very important as the domestic sectors are both jobs rich and tax rich.
The economic recovery is also clearly evident in the labour market where we have now had fourteen successive quarters of employment growth. Last year, employment increased by 2.6 per cent, equivalent to 50,000 new jobs.
Recent data published indicate that:
- The volume of retail sales increased by 5.1 per cent year-on-year in April 2016.
- New cars licensed for the first time were up almost 25 per cent to end-May year-on-year.
- The Purchasing Managers' Index showed continued expansion in the construction sector.
- While consumer sentiment has moderated somewhat it still remains well above the long-run average.
- Employment grew by 2.4 per cent over the year to Q1 2016, equivalent to an increase of 46,900 jobs.
- The unemployment rate fell to 7.8 per cent in May, seasonally adjusted, down from 9.6 per cent a year earlier. This is the lowest rate of unemployment since December 2008.
The positive outlook for Ireland's economic prospects is shared by the 3 major credit ratings agencies. Following Moody's upgrade to an A rating, all 3 have now given an A-Grade to Ireland's sovereign debt.
However, there are several sources of uncertainty. Weaker than expected trading partner growth would negatively impact on Irish growth through reduced exports. Growth in Emerging Market Economies disappointed in 2015, and while Ireland's direct trade exposure remains relatively small, we would be exposed to a more generalised slowdown in the world economy. The upcoming referendum on EU membership in the UK is another downside risk facing the Irish economy with Ireland potentially more exposed than most to a UK exit. Figures published this month showed a deceleration in merchandise trade which may be indicative of a delayed spillover from the slowdown in global trade observed in 2015. Net goods exports, however, continue to contribute positively.
Domestically, the high level of private debt, while falling, remains a concern, and any deterioration in the external environment could prompt households and firms to raise the pace of deleveraging, with adverse implications for domestic demand.
This uncertainty highlights the importance of prudent management of the public finances and of competitiveness-oriented policies that would help the Irish economy to weather any global economic downturn that may emerge.
In summary, I am satisfied that the economic indicators remain stable and broadlyconsistent with the outlook parameters in the Stability Programme Update published in April. However, this is critically contingent upon implementing appropriate polices and that is what the Government intends to do.
101. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he sees opportunities for incentives to encourage the construction sector to embark on an accelerated house building programme given the necessity to ensure that the benefits of any measures are passed on to the buyer, with particular reference to those attempting to purchase a family home; and if he will make a statement on the matter. [17765/16]
View answerA number of measures have already been implemented to help address the underlying supply constraints in the housing market, either directly by my Department or by the agencies under the auspices of my Department. One such measure was the €500 million Activate Capital joint venture between ISIF and KKR to make funding available to the house building sector. Another key measure was NAMA's commitment to support the delivery, on a commercial basis, of up to 20,000 residential units by the end of 2020. While there is evidence of a pick-up in housing supply, it is clear that the level of supply is currently not sufficient to restore the housing market to a sustainable equilibrium resulting in rising house prices.
In the Programme for Government, an ambitious target has been set of ensuring that 25,000 additional new houses are built each year by 2020. To achieve this target, the Government has committed to implementing a number of policy actions designed to help address the outstanding bottlenecks in the housing and construction sector. The Government has already began to fulfil its commitment with the recent announcement of a €200 million Local Infrastructure Fund. This fund will provide local authorities with the access to finance needed to address local public infrastructure deficits thereby opening up sites for development and improving the viability of construction in the residential market. The local infrastructure fund reflects the proactive approach which this Government will continue to take as it seek to address the remaining issues in the housing market.
The Government is currently taking into account the final recommendations of the Oireachtas Committee on Housing and Homelessness and the input from a number of relevant stakeholders as it develops the Action Plan for Housing. Once published, the plan will include a number of time bound and targeted actions designed to expedite the construction process and boost housing supply. By addressing supply constraints throughout the residential market, housing should become more affordable for potential house purchasers.
102. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he remains satisfied that first-time house buyers or the purchasers of a family home will not be priced out of the market in the future; and if he will make a statement on the matter. [17766/16]
View answerThe Central Bank, which has an independent mandate to preserve and protect financial stability, introduced mortgage lending regulations to increase the resilience of the banking and household sectors to the property market and to reduce the risk of bank credit and house price spirals from developing in the future. The current Central Bank residential mortgage lending regulations has regard to the particular situation of first time buyers and provide for a lower deposit requirement for first time buyers of a primary home property compared to other residential mortgage borrowers. For first time buyers, a 90 per cent LTV limit applies on the first €220,000 value of a property and an 80 per cent LTV limit applies on any value of the property thereafter. For non-first time buyers of a primary home, a flat 80% LTV threshold applies and for buy to let borrowers a 70% LTV threshold applies. However, lenders also have a certain limited flexibility to, at their discretion, to exceed these thresholds when lending to credit worthy borrowers.
However, it is important to keep the requirements of first time buyers under consideration. As the Deputy is aware, the new Programme for a Partnership Government (PfPG) provides for a range of measures which seeks to improve the supply of housing and to protect and promote home ownership. In particular, it indicates that the Government submission to the Central Bank will include a request to consider a "capacity to pay" (e.g. the payment capacity of potential purchasers based on rent paid over a five year period to be off set against the current deposit rules). The Central Bank has now commenced this macro prudential review process and my Department will engage with the Central Bank on this.
It could also be noted that recent mortgage lending data from the BPFI indicates that, in the first quarter of 2016, lending to first time buyers amounted to €462 million which was higher that the €405 million in credit which was extended to mover purchaser borrowers.
