asked the Minister for Local Government whether he will hold a meeting with the National Association of Tenant Organisations as soon as possible to reach agreement on the issue of local authority rents.
Ceisteanna—Questions. Oral Answers. - Local Authority Rents.
84.
I have asked the association to submit a memorandum to me setting out the matters they wish to discuss. When I have received this I will consider the question of meeting them.
85.
asked the Minister for Local Government if he will state the policy in respect of the various schemes of differential rents as operated by some local authorities.
86.
asked the Minister for Local Government if he is aware of the dispute with various local authorities in the matter of renting schemes; and if he will consider granting extra State aid to local authorities to contain the rapid increase in the housing subsidy and its consequential burden on the rates.
87.
asked the Minister for Local Government if he is in favour of differential rent schemes or flat rent schemes being formulated by local authorities in respect of new housing schemes and existing housing schemes; and if he will make a statement on the matter.
With your permission, a Cheann Comhairle, I propose to take Questions Nos. 85, 86 and 87 together.
As is stated in the White Paper "Housing in the Seventies" the basic objective of Government housing policy is to ensure that, as far as the resources of the economy permit, every family can obtain for their own occupation a house of good standard at a price or rent they can afford. The average cost of providing and maintaining a local authority house in 1969-70 was equivalent to a rent of about £6 a week. The cost of a city centre flat was up to twice this figure. Rates, heating and other similar expenses are extra.
Most persons seeking housing from local authorities could not afford to pay these amounts. Under the differential renting system their rents are, in fact, based on what they can reasonably afford to pay. Under the system the average rent paid by a new tenant of a local authority house or flat in 1969-70 was about £2 a week. In other words, a new tenant in that year was helped under the system from rates and central taxation to the extent of about £4 a week for a house or up to £10 a week for a flat. Under most rents schemes only tenants with incomes of over £40 a week would pay the economic cost of their houses. The difference between this cost and what the tenant actually pays must be paid by the taxpayers and ratepayers throughout the country, including many tenants and other persons on low incomes and often in bad housing.
I do not think that Deputies would argue that help of this sort to persons in local authority housing should not be given. I must, however, bear in mind two particular facets of the present system. First, most persons buying houses with the aid of local authority loans have an income of about the same level as, or only slightly higher than, the average new tenant of a local authority. These persons are now paying, on average, £7 a week for their houses in loan repayments, ground rent, insurance, maintenance etc., after taking into account the deposit made by them and the grants—for which they qualify—in contrast with the £2 required in weekly rent for a local authority house.
Secondly, if each new local authority house costs, as I have indicated, an extra £4 or more a week, on average, in subsidies from rates and central taxation, then every 5,000 houses provided annually will increase the subsidy bill by £1,000,000 in the first year, £2,000,000 in the second year, £3,000,000 in the third year and so for up to the 50 years for which the money to finance the houses is borrowed. The more money which is absorbed in this way the less will be available for building decent houses for the thousands of persons without them. To help persons with good incomes at the expense of those less well off—or, worse, still, at the expense of those in need of housing —would to my mind be contrary to social justice.
I am aware that disputes exist in relation to rents in a limited number of areas. The existing maxima of the differential rent scales in these areas do not, in most cases cover the cost of the houses when they were provided many years ago. Since then costs and incomes have risen substantially, but rents have not. For this and the other reasons I have indicated, I do not consider that I would be justified in asking the Minister for Finance to provide extra State aid to local authorities for subsidies for existing houses. I do not at present see any alternative to the differential renting system if persons most in need are to get housing of a reasonable standard at a rent they can afford and if we are to avoid diverting money which is urgently required for this purpose to the subsidisation of rents of persons who are reasonably well off.
I may add that most tenants on the upper points of differential rent scales have the option of purchasing their houses at a price which, taking into account the discount available to them, is often lower than the maximum rent of the scale. The tenant who purchases his house stabilises his outgoings. At the same time, he acquires an asset which he may sell if he wishes to move elsewhere.
Would the Minister not agree that the differential renting system acts as a disincentive and militates against people working overtime in order to increase their incomes because if their incomes increase, their rents are increased? Would the Minister also agree that in relation to houses for purchase the terms are unfavourable to the tenants?
I take it the Deputy is implying that overtime is not part of a person's income. The differential renting system is based on the total income of the tenant and I think it would be somewhat ludicrous for the Deputy to suggest that we should take into consideration in assessing income only the basic income for renting purposes and to exclude any overtime or any other moneys the tenant may earn. In reply to the second part of the Deputy's question, the houses being made available for purchase by tenants must bear some relation to present day market prices. That is absolutely essential. I have myself met great anomalies in this already. I have known people to sell a house purchased from a local authority for nearly twice what they paid to the local authority. Either you hand the tenant something for practically nothing or you relate the price to present day market prices. If you hand the tenant something for nothing he can make a big profit later if he disposes of his asset and its costs a great deal of money to replace these houses.
In regard to differential rents, the total income of the household is taken into consideration. In effect, this——
Is the Deputy asking a question?
Yes. This could help to break up families because it might be better for single people to move out of their homes because their income is being taken into account in assessing rents.
The Deputy is making a statement at the moment.
Because the income of single men and women is taken into account, they are unable to save to buy a home of their own if they so wish. That is mitigating against people living in council houses.
I have gone into all this many times and long before I came into the Department of Local Government. The system as it operates is equitable and it is not proposed to make any major change on the lines suggested by the Deputy.
Is the Minister aware of the problem that can arise in a case where a person is assessed for rent on his wages plus any bonus he may have, so that he receives a bill after a few months for, maybe, £20 or £30? This creates a great difficulty for the household. Does the Minister consider it fair that all members of the household should have to make this penal payment? It is not sufficient for the Minister to say that he has gone into this before. He will have to go into it again very soon because he has only a few weeks left now.
The term "penal" is rather amusing.
It is not amusing to those who have to pay such large amounts.
It is not very amusing for those who have no houses and who are depending on the availability of money to the Government to enable the Government to build more and more houses.
The Government have not been building enough houses.
The Deputy is anxious that major concessions be given to people in the higher income groups and to those in houses where there is an income of £40 or £50 a week?
We do not wish to become involved in an argument at this stage.
I do not wish the Minister to become angry——
I do not think the Deputy is being completely honest. If he had to sit down and make a rational decision I am sure that he would come down wholeheartedly on the side of the differential rents system as it operates.
I should like to ask the Minister, calmly and coolly, if in view of the fact that very often tenants have to pay rent on incomes they do not receive, that is on gross income before income tax has been deducted, he would not consider this particular aspect of the matter?
Certainly, I shall have a look at that aspect. Tenants whose incomes vary greatly can usually have arrangements with local authorities to pay their rent on their weekly wage.
Would the Minister say if the repayment figures he has given for local authority and private houses are for those around the cities because it would appear from what he said that the repayment figures for private houses are much higher than what I am aware of? Further, would he not agree that throughout the country a three-bedroomed private house costs less in repayments than what he says it costs to repay the amount for a local authority house? How is this since local authority houses are built by bulk tender while private houses are built as single items?
The figures are average for the whole country.
They do not give a true picture of the situation.
The Minister has said that flats run at about £12 per week while the amount for small dwellings is £6 or £7 per week. Since a small dwelling would cost about £5,000 to build, are we to take it that a flat would cost about £12,000? This would appear to be so from the quick calculation I have done of the Minister's figures. Also, there is the fact that the small dwellings are on a 35-year loan while the flats are on a 50-year loan. This figure of £9,000 cannot be correct because flats do not cost that amount to erect. According to the previous Minister for Local Government, the Ballymun flats cost about £3,000 each to erect. Therefore, are the figures the Minister has given us correct?
If the Deputy wishes to have the figures of the cost of the various flats that have been built throughout the country he should put down a separate question.
The Minister gave a figure of £12 per week as being an economic rent for a flat. On that basis, it would appear that a flat costs £8,000 or £9,000 to build.
The Deputy is making a statement. This subject can be dealt with when the Estimate is before the House.