Vol. 481 No. 4
14 Mr. R. Bruton asked the Minister for the Environment and Local Government if he will revise the income limit for the shared ownership scheme in view of the fact that earners with an income in excess of £14,000 are not in a position to raise a loan of a sufficient size from a building society or bank to purchase a house in Dublin at current prices. [16102/97]
A range of improvements to the shared ownership scheme, including increases in the income eligibility limits, are currently under consideration. However, I am not in a position to announce the details at this stage.
Does the Minister agree that if a typical earner, paid just over the present threshold of £14,000, were to buy the cheapest house in Dublin he or she would have to pay two thirds of his or her income to service the mortgage? Is that not an accurate reflection of the current Dublin house market?
Nationally, 45 per cent of people who have qualified for or availed of the shared ownership scheme were exempted from the income limits. There are major exemptions under the scheme.
That applies to people on housing lists?
Yes, and to people who are surrendering local authority houses and rent subsidy houses.
Does the Minister not think that testifies all the more to the inoperability of the shared ownership scheme for the vast majority of families in Dublin? It is not an option for them. Is it not the case that, at current prices, someone earning close to the average industrial wage must devote so much of his or her income to a mortgage that he or she is not bankable in traditional building society terms? If the Minister is to undertake a review of the income guidelines he should not simply add £1,000 or £2,000 to those limits. He must radically change them if the scheme is to be meaningful.
The Deputy should accept that one of the first things I did as Minister was to review the income limits and payments in the social housing scheme and to submit proposals to the Minister for Finance for improvements to assist people who would normally be expected to avail of these schemes. These limits have not been increased for some time and I agree they are outside the reach of many who would normally have availed of the schemes. I expect to be in a position to have a favourable decision from the Minister for Finance on my recommendations in the near future. In saying that, the Deputy should see that I accept part of his argument that these limits were becoming too restrictive and many people were unable to avail of the schemes because the limits had not been increased, and that I have already moved on the matter.
Will the Minister extend the review to the council SDA loans? They were a source of funding for many people down through the years but in recent times they were not taken up because of the limits which applied. Most local authorities actively discourage people from applying for council SDA loans. The shared ownership scheme was a follow up to housing finance agency loans, which are still being paid by a number of people. That scheme was not a great success, perhaps because of the economic circumstances at that time whereby people paid up to 20 per cent of their income and there were difficulties with negative equity.
A question please, Deputy
In today's better economic climate, perhaps the Minister would reconsider a scheme such as the HFA loans as part of his overall review.
I am happy to look at any aspect of housing which would bring about improvements and make houses affordable to more people. I am not clear what point the Deputy is making about SDA loans because quite an amount of money is available on the money market. However, if he wishes to make a separate submission I will be pleased to examine it carefully if, from his experience, he feels changes should be made to SDA loans. I am not conscious of major difficulties with availability in that area.
What about HFA loans?
That is a separate issue and I will not answer it until the Deputy puts down a separate question. If he makes a submission to me I will have it carefully examined.
(Dublin West): Will the Minister state the timescale for the review and his decision in the matter? Is he aware of the huge urgency of the housing situation? Because of the pathetic amount of money made available by central Government to local authorities, there is huge pressure on housing lists. Fingal County Council only receives money for 85 houses but there are 1,300 families on the list. Does he know that there is enormous suffering in many families as a result of the shortage and the scandalous rise in house prices in the last two years is putting homes and the basic right of shelter out of the reach of more people? Will he take urgent measures to address the position?
I have already indicated that I expect to have a decision at an early date from the Department of Finance on the review of the limits which I submitted. I hope the Deputy will accept that. In regard to housing, the Government is very conscious of the need to ensure there is good housing output, particularly social housing, at affordable prices in order to meet the substantial demand. In fairness to the last Government, in its years in office housing output increased substantially and I hope to see a continuation of that increase. Public representatives are conscious of the pressures on people who do not have satisfactory homes in which to rear their families. All of us who attend weekly clinics are conscious of the demands. With special responsibility for housing, I hope to make a contribution to alleviate housing needs. I will bring this matter to the attention of my colleagues in Government and I hope housing output, which has been buoyant, will be increased, particularly in the social housing area.
I welcome the submission the Minister of State has made to the Minister for Finance. Is the mortgage component of the shared ownership package subject to review? Has the Minister made a submission to the Minister for Finance on that matter in light of the fact that the mortgage element increased to just under 8 per cent from 1 September? That is a significant burden on people who are at the margins of affordability in terms of housing. Will the Minister consider reducing the rate of interest on the mortgage component, which is now above the rate available on the commercial side?
The Deputy is straying from the original question. All aspects of the social housing programme are under review.
Has the Minister seen a recent report by Focus Point which, from its analysis of mortgages, indicates that many people are out of their depth with mortgages and would be in serious difficulty in the event of an increase in interest rates? Since that would have a significant bearing on the success of his case, will he bring that fact to the attention of the Minister for Finance?
There is a preliminary report on that matter but there is no clear evidence in the Department to substantiate much of what is alleged in it. I will be in touch with Focus Point to see on what this information is based. Reports from lending agencies do not substantiate the main thrust of that report.
Did the Minister hold discussions with financial institutions on this issue? Will he agree the raising of the income limit is the first real test for him as a Progressive Democrats Minister in doing his best for low income families?
I have indicated the steps that have been taken in regard to income limits. All the limits have been reviewed and I expect a decision from the Minister for Finance shortly. Income limits are a matter for the Minister for Finance, not for lending agencies.
