Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

Deputy McGrath has made two suggestions in regard to this relief - first, to broaden the residential element of the relief to those who are not ordinarily resident in the property and, second, essentially to broaden the application of the relief beyond the six cities which I have currently in mind. In regard to the first of these points, I would like to emphasis once again that the purpose of this initiative is to encourage families to come back to live in the centres of these cities. The Deputy's proposed amendment would completely reverse the intentions behind the initiative. The suggestion that relief could be granted to someone who is not the owner-occupier would immediately encourage speculators back into the market. This scheme is not intended to appeal to property investors or speculators. I think even those who do not support the initiative would agree with me on that point.

In case there is any confusion about this, I should point out that the properties in question do not have to be occupied at the time the renovation work is done - in fact, in many instances they could not be. A derelict building would have to be made habitable before it could be occupied and the relief would only commence when it is occupied as a residence. The relief is limited to owner-occupiers. It does, not nor will it, apply to landlords or speculators in the private rented sector.

We have seen in the past the difficulties that can arise when tax incentives are provided on a wide-ranging basis. When I introduced the living city initiative in the Finance Bill 2013, I stated that it was a scheme with a specific purpose, that is, to develop and re-invigorate run-down areas in our city centres. The scheme was to be targeted at houses more or less on a street-by-street basis and was aimed at attracting families back to city centre locations.

The second element of Deputy McGrath's amendment is that the owner-occupier relief should be extended to all pre-1915 houses in towns with a population of 10,000 or more. Consider for a moment what that might mean in practice. Every pre-1915 house in the city of Dublin could avail of the relief. Make no mistake, if I acceded to the Deputy's suggestion, relief would be granted to some of the more affluent areas of our cities and towns. It makes no sense to waste tax expenditures such as this in areas which do not need regeneration.

This initiative is aimed at urban renewal and regeneration. We have to target the parts of our cities which are in decline and need help. That is why we are consulting the local authorities, why we will identify specific areas as being most in need of help, why we are trying to attract families back to these areas and why it is why it is a targeted initiative. When I announced the initiative in the budget in December last year, I had envisaged that it would target Georgian houses only. However, following an independent ex-ante cost benefit analysis conducted by my Department which recommended extending the scheme to other types of houses and four other cities, I have decided that the initiative should be available to houses built before 1915 in certain designated areas of our six cities. The precise areas of the cities will be decided on following consultation with the local authorities and other Government agencies.

We cannot go back to large-scale property reliefs and any future schemes should always be subject to comprehensive ex-ante cost benefit analyses. That is what we have done in this case and the results of that independent analysis are reflected in the amendments to the initiative set down in this Bill. For these reasons, I cannot accept this amendment.

The initiative must pass muster in Europe before we can apply it but we are now in a position, having done the cost benefit analysis, to process the application before the European Commission. Things change very rapidly. If one goes back over our conversations on the last two budgets, many Deputies drew attention to the overhang of property in Dublin, how supply was exceeding demand to such a large extent and how there was such an imbalance in Dublin. It is the other way around now. People are advising me there is a supply problem in Dublin.

I hope that in Dublin, in particular in the area between the canals, all those red brick houses and streets we know on the northside and the southside of the city could be restored. If it worked that way, it would help the supply of small family homes for young families in convenient locations in Dublin. However, we will have to monitor it and as it is very hard to predict the level of uptake there will be. It is no cost because it only applies to activity which takes place as a result of the initiative.